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How Your Tax Dollars Are Making America Fat

Obesity in the United States has stretched to a record high—affecting nearly 28 percent of the population and costing more than $200 billion a year in related medical treatment.

At the same time, the federal government is handing out billions of tax dollars each year to businesses that produce and market the very products that have been linked to obesity.

A report by the Public Interest Research Group (PIRG) found that the government has doled out at least $19 billion in subsidies over the past 18 years to companies producing corn starch, sweeteners and soy oils—all key ingredients found in junk food.

Susana Gonzalez | Bloomberg | Getty Images

"These subsidies are all the more egregious at a time when America is facing an obesity epidemic," researchers said in the report. "With over 31 percent of the adolescent population now overweight or obese …it is absurd that the federal government continues to finance the production of sweeteners and oil additives."

The direct subsidies aren't the only way the government is subsidizing the creation and sale of these products. Under the current tax code, companies can deduct "reasonable and necessary" marketing and advertising expenses from their income taxes. A practice some lawmakers want to end for companies that advertise and sell unhealthy food linked child to obesity—which has doubled in the past 30 years, according to the Centers for Disease Control and Prevention.

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Just last week, Sens. Richard Blumenthal (D-CT) and Tom Harkin (D-IA) introduced a bill that would do away with this ad tax deduction for companies that are marketing food of "poor nutritional quality" to children under 14-years-old. The bill requires the nonprofit Institute of Medicine to identify which foods would be considered "unhealthy." And revenue generated by the legislation would be directed to the Department of Agriculture's Fresh Fruit and Vegetable Program, which services fruits and vegetables to elementary students in low-income communities.

The lawmakers say their bill could reduce child obesity by 7 percent, according to an estimate published in the Journal of Law and Economics.

"Our nation is facing a childhood obesity crisis that demands our urgent attention, and one effective way of combating this epidemic is to ensure that our children are not confronted by persistent advertising from soda, snack, and candy makers," Harkin said in a statement.

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The Senators cited multiple studies linking junk food ads to obesity including one from UCLA, which concluded that commercials advertising junk food were related to obesity in children.

"While reducing obesity requires a multi-faceted approach, the Stop Subsidizing Childhood Obesity Act would remove an incentive for food and beverage companies to market unhealthy food to children, and encourage them to use their creativity and resources to encourage children to make healthy eating decisions," Blumenthal said in a statement.

This isn't the first attempt at eliminating the tax deduction for junk food companies. In 2010, Rep. Dennis Kucinich sponsored a bill that prohibited fast food restaurants from using the tax deduction. At that time, the Joint Committee on Taxation estimated his bill would result in about $2 billion in new tax revenue for the federal government.

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Unsurprisingly, the food and advertising industries staunchly oppose the bill.

Dan Jaffe, executive vice president of government relations for the Association of National Advertisers told Adage that the bill would set a precedent for eliminating specific tax deductions.

"You open this door and I can assure you, there will be a tremendous number of people trying to rush through it," Jaffe said. He added that such carve-outs would cause "immense complexity to carry out."

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The legislation likely faces an uphill battle from the food and beverage industry, which has previously quashed the Obama administration's effort to restrict advertising junk food to kids through an intense lobbying effort.

A Reuters analysis from 2012 shows that more than 50 food and beverage groups lobbied against the federal effort in 2011 "to write tougher — but still voluntary — nutritional standards for foods marketed to children." The report found that these groups spent more than $175 million lobbying since President Obama took office.

—By Brianna Ehley, The Fiscal Times

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