Taxes

Should Smokers Keep SCHIP Afloat?

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Congress seems set to approve legislation that would fund an expansion of the State Children's Health Insurance Program with a 61-cent-a-pack increase in the federal cigarette tax. President Bush has promised to veto the bill, which seems contrary to progressive principles as well as conservative anti-tax sentiment. Isn't the idea of a program aimed at helping people of modest means that it should be financed by people who are better off? As a group, smokers are less affluent than nonsmokers, and poor smokers spend a bigger chunk of their income on cigarettes than rich smokers do, facts that combine to make the cigarette tax highly regressive.

Even if smoking does not, on balance, save taxpayers money (which it probably does, once you take into account the savings from less health care in old age and fewer Social Security payments associated with smokers' shorter life spans), I've never seen any credible numbers suggesting that the current level of state and federal taxes fails to cover the external costs attributed to the habit. So higher cigarette taxes to pay for health care cannot reasonably be seen as a user fee or an insurance surcharge for people whose risks are higher. In any case, the smokers paying for SCHIP will not, by and large, be the children covered by it.

For a somewhat different perspective on the proposed tax hike, see anti-smoking activist Michael Siegel's comments. Siegel worries that tying SCHIP funding to cigarette tax revenue will discourage the federal government and the program's supporters from trying to reduce smoking rates.

NEXT: Just How Much Happier Could You Be Anyway?

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  1. “Children” and “Health” in the same acronym? And you don’t support taxing everything to help out?!

  2. And yet none of this matters in the face of people like Sen. Gordon Smith going around saying things like, “This is a choice between tobacco and children…”

  3. Even if smoking does not, on balance, save taxpayers money (which it probably does, once you take into account the savings from less health care in old age and fewer Social Security payments associated with smokers’ shorter life spans)

    I call bullshit. The four years of medical care that precedes a 50-year-old’s lung cancer death are a lot more expensive than the medical care given to a 76 year old who has a heart attack.

    You know what else people do, besides collect Social Security, if they have longer lives? They work at jobs, create wealth, and pay taxes.

  4. You know what else people do, besides collect Social Security, if they have longer lives? They work at jobs, create wealth, and pay taxes.

    Right, so why would we want to depend on a habit that cuts peoples’ lives short as one of our sources of government revenue?

  5. Instead of “State Children’s Health Insurance Program,” it should be called the State Health Insurance Tax. It’s a much more fitting acronym.

  6. From what I understood they were going to reduce payments to medicare to make up the chip shortfall.

  7. And you’ll notice that I’m using the term acronym correctly. For example, NASA is a true acronym because it’s pronounced as a word. FBI is not, because the letters are spelled out.

  8. Did I use acronym incorrectly?

  9. Did I use acronym incorrectly?

    Not if it’s pronounced “ship”.

    I’ve never seen any credible numbers suggesting that the current level of state and federal taxes fails to cover the external costs attributed to the habit.

    Do they even pretend that cigarette taxes are targeted at anything any more? I just assumed that theses taxes are thrown into the general pot and spent on… whatever.

  10. “Children” and “Health” in the same acronym? And you don’t support taxing everything to help out?!

    “Children” and “health” are the new power cards. Play them together, and politicians can rarely lose.

    They don’t want to tax everything, only cigarettes. Why those? Because it’s easy. Why not tax beer? Or fast food? A lot more people use those things than tobacco.

    Perhaps it’s because one of their stated goals is to reduce smoking. This goal passes as honorable these days due to decades of anti-smoker propaganda, but a moment’s thought reveals that one of the goals of the program is to reduce the source of funding for the program.

    How does that make sense?

    I have a suggestion for the new “true acronym.” How about Smoker’s Health Insurance Tax?

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