Enough with the tax-code paternalism

Andrew F. Quinlan President, Center for Freedom and Prosperity
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It’s a common refrain that the tax code is excessively complicated. One obvious and frequently deplored reason is that politicians like to use the tax code to provide favors for special interests in exchange for contributions and support. But another cause deserves equal scrutiny, and that is the belief that people should be steered toward particular choices or behaviors and away from others. Aside from leading to a Swiss cheese-style tax code, this sort of paternalism often backfires, creating more problems than it solves. It must stop.

Take, for example, the recent recommendation of a New York Times writer to put a tax on prepared food in an effort to force us to save ourselves from the horror of processed food. Never mind whether or not someone has a good reason for choosing pre-prepared meals — like a work schedule that leaves little time for cooking — that some member of the elite has announced it better to cook everything at home is apparently reason enough to inconvenience the public in an effort to control individual behavior.

Michael Bloomberg’s crusade to control nearly every aspect of the lives of New Yorkers — from how much soda they can consume to the amount of salt or trans fats allowed in their foods — has been met with considerable blowback. But there is equal reason to be wary of more subtle forms of paternalism. Aside from being an affront to our basic sense of independence and autonomy, such “soft” paternalism can still have real consequences. For one, the so-called “right choice” at any particular moment according to elites is often later found by those same elites to be not so right after all.

Remember the food pyramid? It’s a prime example of the dangers of government paternalism. Developed in 1991 by the Department of Agriculture and aggressively thrust into the faces of Americans, it considered all types of fat to be bad and thought carbohydrates were the best thing ever. But we know now that not all fat is created equal, and carb-watching has become a new national pastime.

Because of these errors, Americans were fooled into adopting waistline-expanding diets. Even federal food programs were impacted, as they were required to meet food pyramid guidelines.

Though the potential for mass error ought to be reason enough not to centralize individual decision making, the problems with the food pyramid went beyond just wrong ideas — it was also captured by special interests. Early versions of the pyramid counseled to consume less red meat and dairy, but were scrapped when the respective industries complained, and a lawsuit later revealed that more than half of the advisory committee members had financial ties to those industries.

Perverse incentives that put special interests ahead of individual welfare thus leave government uniquely unqualified to decide what is best for individuals. Yet over and over again that is precisely what it does through the tax code. Several states have taxes on soda, and more are considering it. Calls for taxes on junk food are also common. And the growing fetish for raw foods over prepared frozen or convenience meals threatens to follow the same path.

With the median family income hovering just over $52,000, most Americans can’t afford to shop exclusively at high-end organic grocery stores. To add an additional tax on those who occasionally choose budget-friendly frozen foods over more expensive and time-consuming fresh, home-cooked meals would do little more than punish hard-working Americans for not being as rich or making the same choices as cultural elites.

Soft paternalism is often sold as a moderate alternative to more intrusive controls, but in practice has largely the same negative consequences as in-your-face paternalism. Politicians are prone to giving weight to the concerns of special interests over those of the people they claim to be protecting from themselves. They’re also not very good at figuring out what’s best for people.

Americans shouldn’t be punished for trying to balance their time, budgets and other trade-offs however they see fit. Individuals are much better-suited to making informed choices about their unique circumstances than cultural elites, technocrats or politicians tinkering with the tax code. It’s time to return to the view that taxes are for raising just as much revenue as is required to fund the necessary functions of government, and abandon for good the paternalistic notions that taxes are or should be a means for controlling the populace.

Andrew F. Quinlan is the co-founder and president of the Center for Freedom and Prosperity.