Congress is on the way to funding a health insurance program for children and, with great imagination, they've trotted out this old horse again:
Senate aides familiar with the negotiations stressed that members of the committee have not reached an agreement on a final package. Overall, it would take a tax increase of 61 cents on a pack of cigarettes, as well as a commensurate tax hike on cigars and smokeless tobacco, to generate about $35 billion in additional revenue.For heaven's sake, at what point do smokers decide that it would be cheaper to grow tobacco and roll their own? But, of course, behind the "it's for the children" justification stands the hypocritical truth that the state and federal governments would collapse without tobacco revenues. So there will never be a smoking ban, only periodic gouges designed to keep just enough people smoking to keep the revenue flowing, as George Will noted:
The states' ability to continue treating the tobacco industry as a "budgetary Alaska" -- the last frontier for exploitation -- depends on brisk sales of cigarettes far into the future. So all 50 states, which in 2004 reaped $12.3 billion in cigarette taxes, have an incentive to carefully calibrate these taxes so as to maximize revenue. They want high taxes, but not high enough to cause large numbers of smokers to quit the habit that is so lucrative to states.Hooray! As an added bonus, all those smokers die early so there's less of a strain on entitlement spending through Medicare and Social Security. It's a win-win tale of addiction.
The state governments seem to be calibrating cleverly: The adult smoking rate has not fallen much recently. So we have here a rarity -- a government success story. Of sorts.
6 comments:
I'm sure this is another case of static analysis instead of dynamic analysis. Last year x cigarettes were sold so raising the taxes on cigarettes will generate x*.65 dollars. What if people decide to grow tobacco and roll their own? Or, more likely, stop smoking or start purchasing their cigarettes on the black market?
Just like the tax issue. Critics railed against Bush's tax rate reduction plan would decrease tax revenue. After all, a smaller percentage of the same tax base equals fewer dollars. However, tax revenue has increased because people's attitudes have changed and the tax base has grown.
"Hooray! As an added bonus, all those smokers die early so there's less of a strain on entitlement spending through Medicare and Social Security. It's a win-win tale of addiction" I could say the same thing about the alcoholic and the fast food fiend and so if the majority of us has an addiction lets tax us all let us not be picky just because you do not like cigarettes.
I keep putting my money in the Vice Fund (symbol Vicex, Mutuals.com) and it keeps going up and up.
Please keep smoking, gambling, drinking, and buying weapons!
There was an online article about smoking and the money you can save by quitting a few months back. It was called "Give Yourself a Raise." You can see it at:
http://www.e-gracenotes.com/article.php?id=1499
Please don't read it! I just bought a house and need my dividends.
Well smokers may die early, but they also die expensively. So the strain on Medicare/Medicaid probably equals if not outweighs the gains to Social Security.
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