Thursday, June 05, 2008

The new tax that can save America

You've heard about the fat tax and the gas tax. Now brace yourself to hear about ... the Fat-Rated Gas Tax!

Inspired by the latest social science research...

"The Economic Impact of Obesity on Automobile Fuel Consumption"

...the Fat-Gas Tax is a variable rate gasoline tax determined by Body Mass Index on an individual basis. You pay for your gasoline purchase by debit or credit card and the tax is added automatically.

Imagine a simple, single tax that can help avert global warming, de-fund Arab terrorists, save scarce natural resources, reduce pollution AND remedy the government's approaching funding crisis for Medicare (by heading off the coming diabetes epidemic, etc.) ... save private individuals billions of dollars of medical costs from avoided heart attacks and strokes and blood pressure medication prescriptions ... make the general population lean and good looking ... and improve your sex life too! That's the Fat-Gas Tax.

Why you want it:

[] A gas tax is far more effective at promoting fuel savings than are CAFE auto miles-per-gallon standards -- which drive up the price of new cars, deprive people of cars they want to drive (good-bye, station wagons!) arguably only minimally reduce total gas consumption (increasing miles-per gallon isn't the same thing, as it reduces the cost of driving per mile and so can encourage more driving) and at any rate take years to become effective as the car fleet slowly turns over.

[] A fat tax is both far more effective and fair at reducing obesity than are other taxes enacted for the purpose on everything but body fat. (Why should a lean long-distance runner pay a penalty tax when enjoying the occasional Monster Thickburger -- and why should honest, hard-working Hardees' employees be penalized for selling Thickburgers to the lean-and-fit -- just because other people are too lazy to put down the box of Oreos, get up off the couch and take a walk to the gym?)

The Fat-Gas Tax combines, compounds, the superiority of both taxes.

Even better, the Fat-Gas Tax doesn't have to cost taxpayers a penny on net! To buy votes keep the tax "revenue neutral" it can be refunded to taxpayers by reducing other taxes.

[] McCain can use it to pay for his cutting corporate taxes (and even to keep the Bush tax cuts).

[] Obama can use to pay for his cutting tax on Social Security benefits (and even to fund Social Security for 75-years).

Hey, do both, make everyone in Congress happy!

Because the Fat-Gas Tax, in taxing the dreadful externalities of both oil consumption and obesity, is the first Pigovian tax squared. Can its rate possibly be too high?

Implementation? Figure the fine details later. But in principle it can't be difficult. Near everybody who has cash to buy gasoline is already part of "the system" -- paying payroll tax or income tax, collecting Social Security benefits or Medicare or the earned income credit, having government-required auto insurance, etc. To stay part of the system one simply will take a short trip to the official Government Weighing Center every so often (accompanied by one's dependent family members as shown on one's tax return) have one's (their) BMI measured, then have the appropriate tax rate entered into the commercial debit/credit card system.

That's certainly a lot simpler than Democratic proposals to have national health care with IRS enforcement, and is simplicity itself compared to the much loved earned income credit. And look at all the benefits it will provide!

Bottom line...

Democrats will love the Fat-Gas Tax because, well, it's a tax ... and for a change, they can honestly say a good one.

Republicans will love the Fat-Gas Tax because both obesity and the cost of gasoline as a percentage of income are concentrated disproportionately among low-income folk, so that's who'll be paying most of it. (As long as half the tax is rebated through though the likes of corporate tax cuts ... ahem, cough, *wink*. )

Academic economists of all stripes will love the Fat-Gas Tax because it is Pigovian -- and they can't help but love Pigovian taxes!

What's not to love? And remember, you read about it here first! (Unless you read about it first in the comments at McArdle's.)

Somebody tell Mankiw. But I'm keeping the IP rights.

UPDATE: You thought this was just a joke, right?