In the final session of the workshop, roundtable co-chair George Isham reflected on the workshop presentations and discussions, and called on roundtable members and participants to share their final observations. Isham recalled that the majority of participants had categorized themselves as definitively not tax experts at the start of the day. He expressed that, at the end of the workshop, he felt more confident about how tax policy can play a role in population health planning, and hoped others felt the same.
Isham highlighted the point by Mallya (see Chapter 2) that taxes are about values as much as they are about economic theory and policy design. It is important to remember that there are winners and losers for every tax policy. If the policy is intended to influence behaviors then it is important to be very clear about the values underlying the policy, what outcome the policy is trying to achieve, and who the allies are in trying to achieve the outcome. He observed that many of the conversations over the course of the day began with unstated assumptions. For example, during the group exercise, there was a hypothetical proposal to tax opioid manufacturers and distributers. Isham suggested that the pharmaceutical industry might not have agreed with the logic used in developing that tax. It is important to be explicit about the underlying assumptions and values relative to what the tax policy is trying to achieve, he reiterated.
Examples of policies that “tax the sins and credit the virtuous behaviors” were discussed, Isham summarized. It was mentioned by some that referring to selective excise taxes as “sin taxes” is stigmatizing, and perhaps
these taxes need to be referred to in a way that affirms their positive intent. There were also examples of how externalities can lead to the creation of exceptions to the basic principles of tax policy. The scope of local and state taxes was discussed, and the regressivity of state taxes was highlighted. Isham observed that corporate taxes were mentioned but not discussed in depth, and he suggested that the roundtable might consider having a focused discussion of the role of corporate taxes as they relate to population health policies. He also suggested delving further into some of the examples of tax strategies discussed that were successful (e.g., why and how were they established, who was responsible). In particular, he was interested in the Minnesota tax overhaul mentioned by Johnson (see Chapter 2).
It is not surprised that establishing a new tax is difficult, Isham said. He felt that the examples discussed, and the experience of the small group exercise, were very useful to convey just how challenging it can be to design a tax policy, including who should be engaged in the process, predicting unintended consequences, and other aspects. No one person engaged in the complex endeavors of health policy or tax policy can know all of the potential ramifications, he said. Tax policy is a critical tool in the kit for building an infrastructure to change the trajectory of health in the country, he continued. To design tax policy strategies to improve population health, it is just as important to listen carefully as it is to have good ideas.
A participant commented on the value of this and other roundtable workshops in exposing participants to new disciplines and tools, and the importance of this type of cross-sector dialogue to achieving population health goals. No one sector knows nearly enough to move population health forward, he said. Another participant expressed his appreciation for the case studies discussed, noting that they move the discussion beyond the theoretical and offer hope. Participants shared a range of perspectives about where to focus tax policy efforts and commented on the elements of moving a tax policy forward. There were also follow-up comments on the topic of the Minnesota tax reform.
Where to Focus Tax Policy Efforts
A participant pointed out that the workshop discussions could be broken down into two types of taxing. The first is using the tax system to change behavior to achieve a health (or social) outcome (e.g., targeted excise taxes). Everything else discussed was taxing to generate revenue for population health improvement. Excise taxes often tax the people
who might benefit from the specific population health improvement in a targeted way. However, it is still necessary to make the case that the population health improvement will matter broadly. He referred to the complexities demonstrated in the examples shared by De Biasi (see Chapter 5) where different tax tools were braided with other funding streams, adding layers of complexity to population health improvement, which is substantively very complex as well. Isham agreed and suggested that what was missing from the discussion of tax policy principles is what is needed to evaluate a tax proposal from the perspective of population health improvement.
Baciu shared a comment submitted via Twitter by Caroline Fichtenberg, who asked, “If income is a fundamental determinant of health, why not focus more on progressive tax policy as opposed to tax policy to fund public health efforts?” Baciu pointed out that this was in line with comments made during the discussion of tax credits (see Chapter 4) when a participant suggested focusing more attention on and expanding the EITC to support population health. With regard to equity, Mallya said that the EITC not only addresses a fundamental cause of health disparities, it gives money back to low-income people to spend on whatever they deem to be of value. This could be paying off debt, including medical debt, or repairing their car so they can get to work, or investing in their child’s education.
With regard to taxes being about values, a participant suggested looking to other countries that have different values than the United States and that operationalize those values in very different kinds of tax structures that, from an evaluation perspective, yield much better population health outcomes than the United States has.
Mallya observed that, while equity was one of the tax principles discussed, racial equity had not been a big part of the workshop conversation. For example, the regressivity of the mortgage interest deduction was discussed, and how low-income renters essentially subsidize that mortgage interest deduction for higher income homeowners. A racial lens needs to be applied to these discussions as well, he said. He pointed out that when the Federal Housing Administration and the Veterans Administration (the Department of Veterans Affairs since 1989) backed mortgages in the middle of the 20th century, African Americans were explicitly excluded, and he added that these issues play out intergenerationally.
Moving Tax Policies Forward
The Berkeley sugar-sweetened beverage tax example was highlighted by one participant as particularly instructive because of the details provided about the strategy, elements of success, and engagement aspects. He also noted the importance of understanding what happens after the
initial vote, for example how a similar tax in Cook County, Illinois, was subsequently repealed.
Lizzie Velten of the American Heart Association reiterated the point made by Morales (see Chapter 3) about the importance of a strong and diverse coalition to the success of the Berkeley sugar-sweetened beverage tax. She said that the details of the policy design are important, but also how an initiative is passed matters (e.g., a ballot initiative supported by voters versus city council approval with limited community engagement). She concurred with the comments made about the importance of having champions. It is also important to follow through and make sure that the revenues are spent for the purposes that the community supported, she said.
Pittman reinforced the need for transparency around tax policies. She recalled Davis’s comment that it is sometimes more expedient to create tax policy behind closed doors with a group of experts, and raised concerns about this lack of transparency in the policy making process. She suggested that many of the questions around equity and unintended harms might not be brought up by tax experts, but they would certainly be brought up by community members and people who might be the “losers” with respect to a tax policy. An open process allows those who would be affected to have an opportunity to know what they stand to lose.
Magnan observed that the discussion about cap and trade seemed to indicate there was bipartisan appeal, and that it was very effective in accomplishing lowering pollution. The topic of climate change, however, does not have the same bipartisan appeal. She suggested the need to bring in people with opposing views and listen to another side of these issues and begin to foster the common ground needed to move to more effective tax policy.
Minnesota Tax Reform as a Case Example
A participant observed that, even with the recent tax reform in Minnesota and the funding targeted toward community health, per capita funding of public health by the state in Minnesota is among the lowest of all the states. Johnson provided a link to Center on Budget and Policy Priorities blog post that discusses the success of the Minnesota tax reform in 2013 and noted that a link within the post provides details about the 2013 tax legislation.1 No state has a perfect tax system, he said. Tax policy is always about making changes around the edges.
1 See Tax Changes, Education Investments Paying Off for California and Minnesota, available at https://www.cbpp.org/blog/tax-changes-education-investments-paying-off-for-california-and-minnesota (accessed February 2, 2018).