FAT TAXES IN THE UNITED STATES

INTRODUCTION

Hi everyone. So today I'm going to talk about an article I found in the Economist. The article is called "Waist banned", and deals with a possible enforcement of a junk food tax in the United States.
This kind of tax is also known as a Pigouvian tax, Pigou being a 20th century economist.

First I'm going to introduce you to the concept of Pigouvian taxes, second we'll talk about its underlying rationale, third we'll try to wonder whether a fat tax will - or not - really changes behaviours, and last but not least we will focus on the theory's flaws. I. PIGOUVIAN TAXES

- definition: PIGOU

Arthur Cecil Pigou is an English economist. He was particularly interested in welfare economics. He developped the concept of negative externality, and from this the concept of Pigouvian tax.
A Pigovian tax is a tax on a market activity which aims to correct the market outcome if there are negative externalities associated to the market activity.
If there are negative externalities in a market, it means that the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market is said not to be efficient and the market will thus tend to over-supply the product. A Pigovian tax equal to the negative externality is meant to correct the market outcome, so that he can be efficient.
There are many externalities in our daily lives, such as cigarette smoke for non smokers, as cigarette causes lung cancer and other dysfunctions, or also possible violence caused by alcohol abuse, etc.
This explains the -over- increasing amount of Pigovian taxes in our daily lives. For instance, the environmental taxes (such as a carbon tax) are Pigovian taxes.
Thanks to this theory, governments are starting more and more to think of creating a tax to minimise bad externalities.

Thus, this tax logic would be applied to junk food in the United States, as suggested by Barack Obama. This