> Essay: Taxing Our Way to Health

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Receipt showing sales tax line

- Taxing Our Way to Health -

by Lincoln Sayger

340 wds.
First published on Feb 8, 2016

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You've probably heard an idea for overhauling our tax system by replacing the inefficient and often unfairly applied income tax system with a national sales tax. The idea is that a national sales tax of between 10 and 30 percent would provide the revenues needed by the government. And since you've probably heard of this, and you can find it easily by searching for 'National Sales Tax', I won't describe it any further here except to point out a few key details. Instead, I want to mention a side effect that doesn't get a lot of attention, that you might not have considered.

The one simple provision that removes the idea that taxes will eat up a larger percentage of a poor person's income is this: staple goods, medical expenses, and direct costs of housing, viz., home sales, rents and mortgage payments, would be excluded from the tax. No sales tax on bread, milk, sugar, flour, or the other grocery items that are now generally not taxed.

Think for a moment about the impact of this. Without the income tax, people will have a lot more money to spend on their monthly expenses, such as food, so that's less of a problem than under the current system.

Because restaurant purchases are taxed but staples at the grocery stores aren't, people would have a financial incentive to eat healthy foods instead of stopping at the hamburger joint. Because of this, people would be more likely to make healthy eating a habit. Healthy eating, in turn, would lead to better overall health, and this would lead to fewer diet-related chronic illnesses. Better overall health would, in turn, lead to fewer medical expenses, which would lead to lower insurance costs.

And lower insurance costs would leave more money for people to buy healthy food, get regular check-ups, and otherwise improve their quality of life. So, it turns out that maybe we can tax our way to a better future, but only if we switch from an income tax to a national sales tax.

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