Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity Proceedings of a Workshop (2019) / Chapter Skim
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3 Creating a Pipeline of Financing for Population Health: Exploring Sin Taxes and Tax Credits
3 Creating a Pipeline of Financing for Population Health: Exploring Sin Taxes and Tax Credits
Pages 21-46
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From page 21... ...
As discussed, a goal of the workshop is to provide participants with the information and tools to join in those conversations about the tax aspects of health issues and contribute in a thoughtful and meaningful way. In this session, two panels discussed different tax policy approaches for generating funding to support population health, including selective excise taxes or "sin taxes," and tax credits.
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In the second panel, Stacy Becker, vice president of programs at ReThink Health, discussed the potential of tax credits to improve population health. In preparation for the breakout activity (see Chapter 4)
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(Sallee) • Despite the extensive use of tax credits at the federal and state levels, there are very few tax credits for interventions for population health and social d eterminants of health (factors such as education and employment)
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Finally, taxes can produce funding for community health priorities.3 Taxes can be earmarked for specific purposes, and Pamukcu emphasized the importance of consulting with the communities that are most affected by these unhealthy commodities and ensuring they have a voice at the policymaking table. Pamukcu listed some specific examples of taxes that can be used as a public health tool, including taxes on: • substances, such as tobacco, alcohol, cannabis; • nutrition, such as sugary drinks, junk food, specific ingredients (e.g., high fructose corn syrup)
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From an equity and fairness perspective, it is important to note that there are complex considerations to contend with when implementing excise taxes on consumable goods. Using tobacco as an example, Pamukcu said that, even though rates of tobacco use have been declining across the United States, not all populations experience that decline, and the corresponding health benefits, in the same way.
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One of the first principles of health equity and selective excise taxes is community partnership and education. It is important to recognize and respect that the people who live in the community are the experts on themselves, their lives, and their neighborhoods, she said, and they need to have a voice in tax policy making.
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To start, she reiterated the suggestion to rebrand these taxes so they are less about reducing "sin" and more about advancing health, and making them a standard part of the public health toolkit. Leading with Health Justice: Berkeley Versus Big Soda Building on the background provided by Pamukcu, Morales shared some of the lessons learned as Berkeley, California, worked to pass and implement the nation's first sugar-sweetened beverage tax.4 Having s tudied similar attempts across the country, Morales observed that what differentiates Berkeley versus Big Soda from other efforts is that Berkeley 4 This section is the rapporteur's synopsis of the presentation made by Xavier Morales of The Praxis Project, and the statements have not been endorsed or verified by the National Academies of Sciences, Engineering, and Medicine.
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The initial thought was to institute a soda tax and use those funds to support nutrition education programs in the Berkeley Unified School District. While that was a good idea, there was a clear need to directly address the health and nutrition needs of the communities that were most affected by the overconsumption of sugary drinks through the provision of community-based programming and services.
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In contrast to the previous s trategy, the Berkeley strategy was "political perfect/public health good," Morales said. The strategy included a 1 cent per ounce tax, which went into the general fund, and a panel of experts would advise the Berkeley City Council on how to invest these funds.6 The tax would be an excise tax, paid at the distributor level.
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Because it is difficult for small community groups to staff up and operate on a 1-year grant, for the 2nd-year recommendations the leadership group asked for and received from the Berkeley City Council $3 million over 2 years to support 2-year grants. Again, about 42 percent went to the Berkeley Unified School District, another 42 percent was awarded to community programs.
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Sales in ounces of taxed sugar-sweetened beverages decreased in comparison to predicted sales, and sales of untaxed beverages, especially water, increased. There were no significant changes in overall beverage consumption, noting that Berkeley residents consumed lower quantities of sugar-sweetened beverages at baseline compared to the national average, Morales said.
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This led the authors to conclude that community education and media coverage of the campaign may have shifted social norms and affected sugar-sweetened beverage consumption among the UC Berkeley population shopping at campus stores. Leading with Health Justice Leading with health justice and engaging the community will significantly transform the ideas for tax measures, legislation, and campaigns, Morales concluded.
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These environmental justice concerns become more complicated in the context of global climate change policy. Carbon pricing through cap and trade is targeting a global pollutant.
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A companion bill, Assembly Bill 617, commits to increasing local monitoring of pollution, and to supporting local governance and local planning for addressing local health problems associated with co-pollutants and toxics. Funds from the revenues of the cap-andtrade programs are also earmarked for investments in environmental justice communities.
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With regard to implementing a selective excise tax, Sallee noted that recent tax economics research has been focused on the salience of different taxes. In the context of a sugar-sweetened beverage tax or a cigarette tax, it is important that the tax be very salient, he said.
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A participant said that, in her prior experience, arguments that these selective excise taxes are regressive were countered with the fact that the associated conditions (e.g., alcoholism) are also regressive, and she asked if that argument was still economically valid.
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, a tax credit is one form of tax policy known as tax expenditures, which are more commonly known as tax breaks. Tax expenditures include 9 This presentation was adapted from a ReThink Health paper in development, Exploring the Potential of Tax Credits for Funding Population Health, which was provided to workshop attendees.
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Others were concerned about such tax breaks, suggesting that they are boondoggles and favors for the wealthy. Still, the residents felt it was important to at least explore what might be possible and agreed to consider tax credits.
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Despite the extensive use of tax credits at both the federal and state levels, there are very few tax credits for interventions for population health and the social determinants of health. As discussed earlier, the EITC and the LIHTC are examples of federal tax credits with some relation to population health.
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Becker cautioned that critics of tax credits will claim that tax credits are not very account able; however, accountability can be built into a tax credit. Becker noted that there is the opportunity to potentially redeploy the investment of existing tax credit funds.
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Prototype Tax Credit: Healthier Workforce Tax Credit12 Following the overview of tax credits by Becker, Burke presented a prototype tax credit program developed by ReThink Health for discussion. The Healthier Workforce Tax Credit is a tax credit for self-insured employers to broaden their investments in health.
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Prototype Tax Credit: People's Choice Health Investment Credit13 McIntosh provided an overview the second prototype tax credit program drafted by ReThink Health. The People's Choice Health Investment Credit uses charitable tax credits to fund "wellness funds" that would operate as part of accountable communities for health (ACHs)
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Charitable tax credits are a viable approach to funding population health interventions as states already operate similar targeted charitable tax credit programs (e.g., supporting antipoverty programs)
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. Discussion Following the presentations, participants raised several topics for discussion, including aspects of returns on investments and leveraging existing tax credits.
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A participant observed that, in the proposed tax credit for the wellness fund, a corporation donates to the wellness fund and the government gives them back a tax credit, and they suggested that perhaps it would be more direct for the government to simply fund the wellness fund. Another participant suggested that existing tax credits could be leveraged for population health purposes.
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She felt that the focus of the workshop discussions was to find ways to fund interventions addressing other social determinants of health. De Biasi referred participants to a recent report from TFAH, Pain in the Nation, for a chart listing the EITC by state and whether it is refundable (TFAH, 2019)
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