Taxed Happy

Two economists provide legislators with another reason to boost taxes.

Michael W. Lynch from the July 2002 issue

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The idea of legislators helping people deal with self-control problems is laughable. But those chuckles will turn to tears when one considers those "self-control benefits of taxation," especially when budgets get tight, which is just about every year.

Commuters' happiness may correlate with staying home, for instance, so why not increase gas taxes to $10 a gallon and improve their lives? I'm sure exercise correlates with happiness, so why not ding activities that grow couch potatoes? Put a big tax on daytime movies, and force people to pay for time in coffee shops during prime workout hours.

If those possibilities seem ridiculous, consider this one. Suppose you want to eat healthy but lack the self-control to pass up a bag of Fritos for a banana. Why not put special taxes on "unhealthy food"? This is actually a goal of two national pressure groups that claim to be making progress in state capitals.

The smoker, the driver, the couch potato, the junk food fan: Each, as Mises would predict, is maximizing his happiness. Alas, they have neglected to consider the happiness of the tax-hiking state legislator and the activist toiling to coerce the rest of us into changing our lives.