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Why My Proposed Tax May Make the US Better Than Ever

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November 10, 2010 – Comments (13) | RELATED TICKERS: MO , MCD , YUM

Why My Proposed Tax May Make the US Better Than Ever

So I am confused, bewildered, amazed, and just don't understand the thinking of the government anymore.  Don't worry reader, this isn't about the Democrats or Republicans or any party.  It has nothing to do with parties at all.  It has to do with taxes.  In particular, this blog is about how my new Fast Food/Bad Food Tax will change the United States for the better in numerous ways!

As you all might know or not know, the US tax makers decided to put into effect the Tanning Tax.  This tax went into effect around June 30, 2010 of this year.  This tax puts a 10% of all tanning across the US.  So if something was $20, it is now $22.  Straight forward and simple.  It is believed to $2.7 billion over the next 10 years.  Let me repeat that statement (any other time I'd argue the validity of that statement since I have tanned in the past and know it to be way too high of an estimate) - $2.7 billion over the next 10 years.  I want you to remember this figure as I introduce to you my Fast Food/Bad Food Tax later in this blog.

I won't get into the other taxes that consumers pay for and this won't get into any of the other revenue streams the government receives like property taxes or anything like that.  We all know retail taxes vary across the country as well as food and dining taxes.  There are other smaller ones.  But we all know that tobacco and alcohol have a seperate tax too.  Tobacco in particular is another figure I want to introduce.  In 2008, tobacco taxes brought in $16.5 billion for the entire United States.  Let me repeat that $16.5 billion for 1 year.

Alcohol similarly brought in $5.7 billion for that same year.

Another cost I want you to keep in mind is that in 2008 again (like to keep things simple), health care costs overall for the United States was $2.3 trillion in 2008, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980.  Let me put this out in simplified form: Healthcare $2.3 trillion ($2,300 billion) for one year.

Ok you are asking, what is with all these numbers?  What are you trying to say mikecart1?  Now this is what I'm saying.  Well, hold up a second.  Let me put another number out there haha.  MCD which is globally known as the king of fast food brought in total $23.5 billion for 2008.  That is just one chain, one segment of fast food and bad food.

You might be asking what is bad food before I get into my tax proposal.  Well what is good food?  I mean if I see those food pyramids on all these cereal boxes and there is an FDA that judges which foods are good and bad, let's just keep things simple for this blog.  In a grocery store, everything on the outer ring (fresh foods, dairy, meats, foods basically that need to be cooked and prepared) will be considered good.  Things like crackers, cookies, chips, candy, etc. (everything on the inside) will be considered bad. 

Anyways, I find it funny how there was little hesitation to push a 10% tax on tanning which will bring in $270 million a year in tax revenue.  The overall goal was to:

1) Decrease health care costs (melanoma, skin cancer, etc)

When you have MCD bringing in over $20 billion a year with ease.  In 1 year, a 10% tax on just McDonald's alone would bring in more money than tanning will over 9+ years!!!  Am I the only one that sees the insanity????

In addition to that, here are my other points I'd like to throw out there for discussion.  Some may be wrong.  If so, comment or discuss your concerns.

1) A tax on fast food/bad food will hopefully make fast food less attractive and help the rising obesity rates in the United States as healthier food vendors have some leverage to attract new customers.

2) As the nation grows slimmer, health care costs decline!  Did anyone think of that.  A large part of health insurance costs in group rates (with companies or with large health companies) are things like diabetes! heart disease! knee problems! cholesterol! blood pressure! 

3) If companies don't have such a high liability on their now slimmer workforce, they can hire more people with that extra cash.  They can pay more to current employees!  Unemployment anyone?

4) If mega-monopolies like McDonald's get penalyzed then the smaller competition that IS offering healthy food has some chance to survive.  A lot of closings in my area are smaller independent restaurants getting destroyed from fast food due to simply margins and lack of customers.  This will help these places keep jobs and be able to hire even more people!

5) With the government getting this additional money through fast food/bad food, they can spend it on improving the infrastructure of the country: roads, construction, buildings, education, and new programs!

With more money for these things like education, maybe, just maybe we can teach the next generation about how to properly tax a population to get the most bang for your buck.

Cheers! :o]

13 Comments – Post Your Own

#1) On November 10, 2010 at 12:33 PM, davejh23 (< 20) wrote:

Why not allow health insurance companies to group customers into classes like auto insurers do?  Charge outrageous rates to those in the obese class, the smoker class, etc...  Provide large incentives for those in the upper percentiles of health (by who knows what measure) for their age group.  This would provide a much stronger incentive to take care of your own health.  I doubt that a 10% tax on fast food would change many people's behaviour.

A large portion of your outrageous insurance premiums is the equivalent of unisured motorist coverage on your car...it's stupid that you should have to pay so much for auto insurance to protect yourself from those that don't carry coverage that is required by law, and it's even more stupid that your health insurance premiums cover those that have no coverage and run to the emergency room every time they have a problem.  State governments should fund non-profit clinics that provide limited medical care for the uninsured...you don't buy insurance, that's what you get.  We used to have many such clinics that were driven to close by malpractice issues anyways...it's a proven system.

Also, why should we require insurance companies to pick up those with pre-existing conditions?  In some cases, this makes sense...if someone has had continous coverage and is switching insurance companies for some valid reason, they shouldn't be denied coverage because they have diabetes, etc...  However, should insurers be required to pick up someone that has never had insurance coverage and decides to apply for coverage only after they learn they have terminal cancer?  This is the same as selling term life insurance to someone that you know will die within the term of the policy. 

This may sound cruel to many, but the system we have is broken and the changes being put into place are only making things worse.  My health insurance rate increase this year was more than double the largest increase I'd ever seen previously.  If this is at all indicative of what others are seeing, disposible income for millions of families will likely be declining next year...I'm sure that will held the "recovery".

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#2) On November 10, 2010 at 12:40 PM, davejh23 (< 20) wrote:

Sorry for the rant, but one more point:

An uninsured/under-insured motorist can have their wages garnished 55% as the result of a judgement in my state.  This can not be cleared in bankruptcy...the only way to get around the judgement would be to stop working for the rest of your life.  If new healthcare law is trying to make health insurance mandatory, will the same laws apply to those not carrying health insurance?

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#3) On November 10, 2010 at 12:53 PM, goalie37 (91.48) wrote:

As a former smoker, I know that using taxes as a way to stop peoplem from doing harmful things just doesn't work.  It only ends up costing those consumers more money that can then be wasted by politicians.  I wish there was a way to stop obesity, especially in children, but taxation just isn't the way.

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#4) On November 10, 2010 at 1:32 PM, boogaloog (< 20) wrote:

Unfortunately, you ultimately come to the question: "What defines a bad behavior which deserves taxation?"  Personally, I'd love to see massive taxes on all junk food & fast food.  Add to that cigarettes, frivolous fashion purchases, texting (I HATE seeing some idiot teenager texting while driving!) and all other things I see as worthless/stupid/unhealthy.

But maybe someone else sees my participation in sports (a healthy activity) as deserving of taxation because I also get injured from time to time, thus using possibly more than my fair share of the pool of money people pay in to my insurance company.

It will take a brain bigger than mine to figure out a fair taxation scheme. Or a way to combat childhood obesity.  But I appreciate the fact that you at least care about these issues and I welcome discussions by anyone willing to discuss them calmly and reasonably.

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#5) On November 10, 2010 at 2:11 PM, Option1307 (29.71) wrote:

The overall goal was to:

1) Decrease health care costs (melanoma, skin cancer, etc)

No. Originally the tax was to be applied to plastic/cosmetic surgery. However this group of physicians were obviously upset and lobbied the AMA (largest medical association in the US)  to not endorse the healthcare bill. The AMA only agreed to endorse the bill after the tax was switched to tanning from plastic/cosmetic surgery. Thus, this tax had nothing to do with decreasing health care costs, it was simply another back door deal to please special interest groups.

 

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#6) On November 10, 2010 at 2:20 PM, mikecart1 (98.86) wrote:

#1) I think insurer's should not leave anyone out of health insurance.  We all die and for anyone to say to not pick up someone because of pre-existing issues it to be naive on the basic circle of life.  Health problems come when you least expect it.

Also, there should be some incentive in place for not only taking care of x amount of patients in any field, but in taking care of them successfully in a timely manner.  I have wasted so much time in waiting rooms on doctors that can't keep appointment times, it is unbelievable.

#2) You seem focused on uninsured motorists.  I think those people should just be forced to go to prison.  That will fix that entire issue.  Heal them up and then send them off to jail is what I say.  They are basically hurting or killing people with a large machine.

#3) I believe when parents are forced to get off their rears, stop watching their favorite TV, and dedicate some time to actually cooking healthy food for their children, they will.  Smoking is not quite the same as eating.  Smoking is a luxury.  Eating is required.  It is a matter of getting people to eat the right stuff.  All smoking is bad.  Not all food is bad.

#4) Well who said tanning is bad?  Those that tan in extreme amounts is bad, but so are most things in life.  Exercising 2x a day, everyday is bad also.  It is about moderation.  The tanning tax also singles out an entire group since we all know not everyone tans.  But I'd like to see that 80% of the grocery store that serves junk food taxed ridiculously.  That food serves no requirement for life and has nearly no nutritional value.  I find it funny how they also say they provide 1 or 2 g of protein but no one realizes that the protein in junk food is a complete waste. 

Childhood obesity and any obesity is simple.  It comes down to food.  Not these sports or these PE programs.  It is just like bodybuilding.  Any doofus can go to the gym and lift weights.  That requires no skill or dedication.  What is important is that bodybuilder's diet.  Nothing different with kids. 

People complain about video games.  But all that happened was kids went from playing board games,  card games, and sitting outside to playing video games.  The thing that changed was the quantity and quality of the food they eat.

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#7) On November 10, 2010 at 2:32 PM, outoffocus (22.92) wrote:

Why not allow health insurance companies to group customers into classes like auto insurers do

All insurers do that.  Even health insurers.  Its just with group insurance, the overall premium is based on the demographic makeup of the individual members and the individual premium is divided accordingly.  But if you were required to buy individual insurance, those very standards you mention apply.  Thats why most people cannot afford individual health insurance. 

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#8) On November 10, 2010 at 2:39 PM, mikecart1 (98.86) wrote:

#5) You might be right.  I was going by research through news articles.  I only know about it from actually going to a salon for a vacation and was told before I bought whether I was aware about the 10% tax.  It wasn't that bad.  The tax doesn't affect me or probably 95% of other indoor tanners.  It is so ridiculous though because not every ethnic group tans.  And of that group that tans, only a small % do and a small age range even can and even smaller does.  So much effort went into a tax program that brings little if any money in.

#7) Agree.  Our company insurance is similar to that.  We get to choose which provider we want and insurance goes up a lot if you aren't single.  If you have a family, a ton of your money goes to paying for healthcare.  I am glad I have it because i usually use it every year and then some from injuries, health problems, sports related problems, etc.

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#9) On November 10, 2010 at 3:40 PM, chk999 (99.97) wrote:

The question though, is who decides what is desirable and undesirable? For instance, I think watching TV is a bad thing. So I think there should be a stiff tax on cable and satellite TV. But a lot of people would disagree with this. In the absence of an infallible source of desirable and undesirable, I think social engineering like this is a bad idea.

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#10) On November 10, 2010 at 3:54 PM, mikecart1 (98.86) wrote:

#9) That is interesting.  However, I still think there is something greatly different between food, tobacco, and TV.  TV has a lot of good programming and can be beneficial.  Maybe tax premium channels that only show movies like Cinemax, Showtime, and HBO?  But then who gets the tax burden?  Cable provider or the network themselves?

Food has a selection that is clearly and undisputably bad and good.  I never understood the idea of how someone can argue on a particular food being good or bad.  A chocolate chip cookie for example serves no healthy function for the body - much like a cigarette.  No one can argue this as it is a known. 

However, it might be a bad idea.  If so, then the tanning tax was an extremely bad idea. 

I like this debate though haha!

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#11) On November 10, 2010 at 4:06 PM, Thompr97 (< 20) wrote:

Begging your pardon, mikecart1, but I wanted to stop by here and make a few observations:

• In perusing your blog postings here, I must compliment you on your writing and your perspective.  You also seem to be respectful and (somewhat) down to Earth as opposed to an arrogant persona.  That's not to say I agree with everything or that I am a big fan.  It's just to say that I respect your presentation here.

• There is a frequent poster on the Yahoo! AAPL message board who claims to be you.  He uses multiple aliases based on "mikecart1" and provides references to this blog now and then.

•  The problem is that in that other forum his persona bears very little resemblance to yours on here.  He is prone to bragging about himself, calling people names, and making wild assertions the likes of which I can't find anywhere in these blogs.  Here is just one (amongst many) example:

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_A/threadview?bn=60&tid=3014211&mid=3014264

 After you and your followers here read the content at that link, I would be interested in knowing whether you can confirm that the poster is, in fact, yourself.  If not you, then I suspect you would be strongly incentivized to deny any relation to that character.  The corollary is that if you are silent, then you are probably acknowledging that he is you. 

I'm curious to see your response.

Regards,

Thompson 

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#12) On November 11, 2010 at 1:48 PM, mikecart1 (98.86) wrote:

#11) I thank you for your compliments to my blog on here.  I try to do my best to research topics that are different from those on the front page but are relevant to many of the members on here.  I am not a blogger that posts about individual stocks or their financials.  That is not my investing style.  I tend to invest using a global macroeconomic approach based on what I see around me, who is using what, and what trends are occurring now and will be in the future. 

Anyways, what do you think about the current tax system or at least my idea?  Share your thoughts!

-mikecart1

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#13) On November 11, 2010 at 2:53 PM, Thompr97 (< 20) wrote:

#12)  I gave you my answer over on the Yahoo AAPL board, so you already have my thoughts.

Given that you say your investment style is not based on individual stocks, I'm surprised that you posted this just 4 days ago:

 "T Minus 24 Hours 30 Minutes Until AAPL Blastoff to Under $300!!!

My new analysis shows there will be a massive selloff in approximately 24 hours and 30 minutes for the following stocks:

AAPL

You have been warned. May God have mercy on us all!

-mikecart1, Professional Investor"

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_A/threadview?bn=60&tid=3012381&mid=3012381 

I especially like the "Professional Investor" signature, BTW.  Then there's this one, in which you talk about how your research on AAPL (note: an individual stock) is "astronomical" and brag that your probability of picking good stocks is over 90%.  (That's odd, it looks like this year, at least, you are about 3 for 18 on your CAPS picks.  Gets better going further back, but 90% is a stretch.)

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_A/threadview?bn=60&tid=2995252&mid=2995252

But my favorite by far is this one, entitled "mikecart1 - The HIstory of An Internet Forum Legend"...

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_A/threadview?bn=60&tid=2992346&mid=2992346

Some money quotes:

• "I've seen it all. Nothing you say can influence my body or life in anyway."

• "I used to say I'd go to VT before I even got accepted. I bragged about an MBA for 3 years while I was still studying for one. Those diplomas are now mine."

• "Diss me on my looks, and I say for you to look in the mirror. 9 out of 10 girls can't lie. I got the looks. I got the cash. I got the women."

• "Physically, I am probably bigger, stronger, and faster than the majority of the posters on here. At 6'0" and offseason weight of 210lbs, I resemble Reggie Bush physique wise. Obviously I'm not black though."

• "Intellectually, I am just superior. My IQ is 128 - on the official charts!"

• And more (must be read to be appreciated)! 

 ========

So now I ask you to confirm to all of your fans...

Is.That.Yahoo.Poster.Really.You?

 

Thompson 

 

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