And it's not just cupcakes. Children of witlesses are taught that anything to do with birthdays and holidays is bad and wicked. Eating a cupcake is usually associated with a birthday, and so the witlesses have nothing to do with them.
There are so many other harmless things that panic witless children. Take singing winter-themed songs. How many born-ins remember singing "Jingle Bells", only to get in trouble with your parents. Easter candy is another. All because of the "stumbling" card that is played. They do not eat the stuff, even if they are not celebrating Easter, because it might stumble someone. This could also play a role with the cupcakes.
Also, I would not rule out eating cupcakes ultimately being banned in the future. With Jaracz dead, Losch is the next humanoid to take control. And I suspect strongly that he will start putting teeth in those bans he has been throwing around. Take college: Didn't Losch have something to do with "college is like shooting oneself in the head" or "D.E.A.D."? All it takes is one Kool-Aid Washtowel or Kingdumb Misery, or a letter through the hounder-hounders, or a part in a Grand Boasting Session in the near future, and eating cupcakes could officially be celebrating something that "we don't do". On top of that, this guy is perfectly capable of putting teeth in a full entertainment ban, probably starting with sports, that could get totally out of control. I know not where the slime will draw the line, but given Boozerford's bans on Christmas and the cross, nothing would surprise me if I see a rag or hear of a part at an a$$embly that something formerly permitted is now banned.