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Are cigarette taxes fair to the poor?
#113 - 0--spud--Are cigarette taxes fair to the poor?--2008-07-07 11:37:21
#The cigarette tax is the most regressive form of taxation out there, even worse than a flat rate tax.
As this piece is being written, the Massachusetts House passed a
bill with a 93-52 vote to increase the cost of cigarettes by $1 per
pack. According to the
Boston Herald, the increase would generate $174 million in new taxes.
As of January 1, 2008, according to the Federation of Tax
Administrators (taxadmin.org), Massachusetts currently ranks 15th in
the nation on cigarette taxes, at $1.51/pack. The highest in the
nation is New Jersey, which taxes $2.575/pack. The lowest state in the
Union is Missouri, which charges just 17¢/pack.
If the Massachusetts
cigarette tax goes up $1, the $2.51 in taxes will be the second highest
in the nation.
As for the bordering states, currently, the cigarette tax in Vermont
is $1.70/pack (11th), $1.08 in New Hampshire (24th), $2.46 in Rhode
Island (2nd) and $2.00/pack in Connecticut (4th).
It is not known
whether the expected revenue projections included the fact that
Massachusetts will lose many purchasers of tobacco products to New
Hampshire, where the cigarette tax will be $1.43/pack lower, as well as
purchasers
from Connecticut or Rhode Island, where there will
no longer be a significant tax disparity.
Merchants in Pittsfield
should be aware that New York has $1.50 in taxes on cigarettes, making
the state cigarette tax $1.01 less per pack in places such as Lebanon.
Of course, on state Indian reservations in New York there are no
cigarette, taxes producing substantial savings for consumers.
There is little denying that cigarette smoking is just about the
most harmful thing you can do to your body, save for using crack
cocaine as a hobby or jumping off a cliff without a parachute. The
problem is that it is powerfully addictive, and those who smoke may be
powerless to quit.
One justification for the tax is that cigarette smokers overly tax
the health care system. But most of the studies on the
subject consider only the costs imposed by those who die from cigarette
related diseases. However, since everybody dies, it is uncertain
whether the cost of dying by cancer is more expensive than the cost
imposed by the type of death which would have occurred later in life
but for the patient’s smoking. Moreover, there are costs associated
with living: routine health care costs, dental care, and medical
expenses for such things as broken hips. There are also the costs
associated with providing housing for an elderly person who has not
died, as well as exorbitant nursing home costs that often must be
picked up by the state.
Finally, when people die early, there is the
savings on Social Security and Medicare. When all of these facts are
taken into account, the argument that there is somehow a net savings
when people live longer and die of non-cigarette related reasons may be
specious.
The more credible argument for increasing the cost of cigarettes is
that it may reduce the number of smokers. One problem with this
argument is that it does not account for the number of people who take
up rolling their own cigarettes and who often do not use filters.
Another is that monies that were supposed to be spent fighting smoking
almost never end up being used as promised and the taxes end up in the
general tax revenues, as has happened in Massachusetts before.
Still, there are
some people who decide that they cannot
afford to smoke anymore, and actually cut back or quit altogether. But
the question is how many?
According to the
Birmingham News,
when Alabama raised its cigarette taxes in 2004 from 16.5 cents/pack to
a still low 42.5 cents/pack, there was no reduction in the percentage
of people that smoked. According to a 2001 study by researchers at the
Johns Hopkins Bloomberg School of Public Health, “Laws limiting vending
machine access had a statistically significant deterrent effect among
youth who smoked, but cigarette taxes did not.” The problem is that
when you start smoking, the monetary deterrent is minimal; but by the
time you acquire a two-pack-a-day addiction, you are compelled to pay
the taxes to feed your habit.
One thing is for sure — the cigarette tax is the most regressive
form of taxation out there, far worse than a flat rate tax. The
$916 per year in taxes for those Massachusetts residents who smoke a
pack a day habit constitutes 3.66% of income for those
earning $25,000/year, but just .916% of income for those
earning $100,000. By way of comparison, the Massachusetts income tax
is currently a flat rate of 5.3%. - --comments-->44--985--1
