Taxes

Why Do Supporters of Health Insurance Subsidies for Children Hate Poor People?

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An analysis by the Tax Foundation concludes that the proposed federal cigarette tax hike, which I criticized last week, is the "least defensible" method of funding the State Children's Health Insurance Program. "No other federal tax hurts the poor more than the cigarette tax," writes the foundation's Gerald Prante. "A politically popular, expensive program should never be funded by a small, low-income minority like cigarette smokers." Prante calculates that "the burden of the proposed cigarette tax hike [from 31 cents to $1 per pack] on the lowest-earning 20 percent of households is 37 times heavier than it would be if the government raised the money with the federal income tax. Put another way, the proposed cigarette tax hike would hit the poor with the same force as cutting the Earned Income Tax Credit (EITC) by one-fourth."

Prante adds that state and federal "taxes on tobacco products increased three times faster than alcohol taxes, the other major 'sin tax,' from 2000 to 2005." He suggests "the most likely reason for the disparity is that a majority of citizens enjoys alcohol while smokers are a minority, about 20 percent of the population nationwide." Picking on an unpopular minority with little political influence will always be easier than raising revenue through a broader-based tax, but that doesn't make it right, as self-identified progressives should realize. 

By the way, for those who were skeptical of my claim that smoking probably, on balance, saves taxpayers money, Prante links to a 2001 paper by Patrick Fleenor that reviews the research on this issue, which is also discussed in For Your Own Good, my book on the anti-smoking movement.

[via The Rest of the Story]

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  1. It always bothered me that taxes on cigerettes,alcohol,and gasoline are paid at the wholesale level.Most people have no idea the true cost of the products[before taxes].I read some where that over 80% of the cost of a pack of cigs is tax.About 25-30% in the cost of gasoline it’s 25-30%.I’m no sure about beer.I wonder what people would think if retailers could post the true price of such products before tax.

  2. Instead of taxing cigarettes to fund health insurance for children… why not just levy a head tax on children?

  3. Russ R,

    You can’t have people bear the actual cost of having children… why people may not have four or five of them that way!

    (Sorry, a comment born of witnessing a common Kentucky scene this weekend… a five-year-old beating a three-year-old, while an infant screams in a stroller and a pregnant mother stares off into the distance.)

  4. but don’t the poor have more children than the rest of us, meaning they are paying more for their own child’s healthcare that way?

  5. From the linked paper, While many nonsmokers may find it hard
    to fathom any benefits arising from smoking
    (which helps explain why they themselves
    don’t choose to smoke), we know
    from their actions that smokers tend to feel
    quite differently. Each year they freely exchange
    hundreds of billions of dollars of
    value for the opportunity to smoke cigarettes.

    Another wow, I would have thought a libertarian would defend a free market till the end, but I never would have thought a so called libertarian would ignore addictions entirely and say that an addict’s daily choices are just evidence of a free market in action.

    The linked Fleanor paper seems asinine since it determines that since there are almost no medical insurance discounts for non-smoking compared to life insurance discounts for non-smoking that is part of the proof there is no difference in medical costs for smoking vs. non-smoking.

    Of course, most people get their medical insurance through group plans at work and their life insurance through individual plans at home. And it’s not at all the same group of people that have medical insurance than have life insurance. Kids have medical insurance but not life insurance. I would bet that life insurance is bought mainly by older people as they have children and wives and by more well off people than poor.

    And the paper also describes lifetime medical costs of smoking being the same as non-smokers but never has the guts to explain that that is because smokers die earlier.

    The paper is a heap of shit, but one that you gladly wallow in since it supports you.

    I wouldn’t have thought someone could move from defending the poor and smokers to claiming that since it kills people early it saves society money all in the span of a single essay.

    Since I know you are both a freedom fighter as well as concerned about saving society money, I can only ask,

    Which brand do you smoke or are taking up?

  6. Michael Pack

    I read some where that over 80% of the cost of a pack of cigs is tax

    The cig. tax is 31 cents. If a pack costs $3, that’s about 10%. Of course, that doesn’t take into account state taxes, but even in liberal Maryland and DC, they only cost $4-$5. If that extra $2 is all tax, then the percentage is $2.31/$4=57.75%, being the most generous estimate, since that extra $2 probably isn’t all tax and the fact that I’m using a high end estimate for the price.

  7. errr, used the low end price

  8. If we have to have taxes, and as a libertarian I think we do. My favorite tax is the lottery, but next up are alcohol and tobacco. I’m as skeptical as anyone when it comes to social engineering. But under the maxim “that which you subsidize you encourage, that which you tax you discourage”, I’d rather tax vices than productivity. Can I keep my decoder ring?

  9. “Why Do Supporters of Health Insurance Subsidies for Children Hate Poor People?”

    Hmmm. Is it because children hate poor people?

  10. Everybody hates poor people; it’s how we encourage them to stop being poor. Same goes for fat people.

  11. Can I keep my decoder ring?

    Sadly Warren, no. I hereby release you from the Order of the Dork-wad. Please return your decoder ring to Nancy at the front. She will spray it with lysol and give it to that skinny disenfranchised white kid over there in the corner, who has been waiting for one to become available since our supplier (the gaming/LARP store down the street) went out of business.

    For serious though, I’m not sure I like how you define “vices.” I too believe that maxim, but other things are vices as well and we don’t tax them like we do cigarettes and alcohol. What about vanity? We don’t put a serious tax on gym memberships or beauty products… maybe we should, since most people think vanity is a vice (unless you’ve read one of the main articles in the most recent issue of Men’s Health). I understand that for a minarchy, government revenue has to come from somewhere, but attempting to use it for social engineering isn’t particularly consistent with the concept of liberty.

  12. “Please return your decoder ring to Nancy at the front.”

    Nancy Grace, of course.

  13. brian,you forgetting the court imposed tax the industry agreed to .I believe you’ll find about 3.00 per pack goes to goverment.

  14. One good thing about an increase in cigarette taxes is that it does more to discourage teenagers from getting addicted in the first place than public service announcements ever will.

  15. Warren,

    The taxes to fund a minarchy should be levied on the users of the services to the greatest extent possible. Taxing cigarettes to finance unrelated services that could and should be privatized isn’t remotely libertarian.

    If you repent of your statist views, though, you can keep your decoder ring. Not like lots of folks are lining up to claim it.

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