Democrats often bristle at the suggestion that they support nanny-state policies. And with good reason, given the GOP tendency to equate any sort of social policy with overbearing big government.
But if Democrats don't want to be slandered, they should stop making it so easy. The Tax Foundation recently spotlighted a Democratic tax proposal that gives substance to the name-calling: the Stop Subsidizing Childhood Obesity Act, introduced last month by Sens. Tom Harkin, and Richard Blumenthal.
According to its champions, the act would protect children from the predations of junk food purveyors. In particular, it would deny manufacturers any sort of tax deduction “for advertising and marketing directed at children to promote the consumption of food of poor nutritional quality.” It would use the resulting revenue to help fund the Department of Agriculture's Fresh Fruit and Vegetable Program.
That all sounds great. Except for the fact that it’s arbitrary, capricious, and an egregious misuse of tax policy.
Now don’t get me wrong -- I have no love lost for the purveyors of Oreos, Cheetos, Ho-Hos, or any other vowel-laden junk food. But I don't think the tax system is the right vehicle for regulating the consumption of those foods – by children or anyone else.
As a tax geek, I was most offended by the bill sponsors’ attempt to claim the moral high ground of tax reform. The legislation, insisted Blumenthal, would close “the nonsensical tax loophole allowing companies to write off the cost of marketing junk food and sugary beverages to children.”
The deduction for advertising might be unfortunate, and in terms of public policy goals, it might even be nonsensical. But it is no loophole. As the Tax Foundation’s Tyler Dennis points out:
- Fully accounting for the costs associated with earning revenue in order to define business income is good tax policy, not a so-called "loophole." Business taxes are levied on profits, meaning revenue minus the costs of earning that revenue. Typically, advertising and marketing are included in these costs, and sound tax policy requires they should be.
Reasonable people can disagree about what qualifies as a loophole. But by almost any definition, the deduction for advertising junk food is not one. It is not inadvertent (one quality often associated with the term), and it doesn’t favor one group of taxpayers over another. Indeed, closing this “loophole” would actually create horizontal inequity where none currently exists.
I'm all for public health efforts designed to reduce childhood obesity. But it has to be done the right way, not just the easy way. It will take education initiatives and public information campaigns. It might even involve some prudent regulation of packaging and labeling.
And most important, it will require the elimination of real junk food subsidies, like those embedded in federal agriculture policy. As Jen Kalaidis reported last year in The Week,the vast majority of existing farm subsidies go to “meat, dairy, corn and other grains — a large portion of which are used to make junk food — while less than 1 percent goes towards fruits and vegetables.”
If Democrats want to do something about junk food, this is the place to start. As the food author Michael Pollan has observed, it’s these giveaways that make “Twinkies cheaper than carrots and Coca-Cola competitive with water.”