Taxes

SCHIP Supporters Think More People Should Be Smoking $30 Cigars

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I suppose this makes the proposed tax increase to pay for the State Children's Health Insurance Program slightly more progressive, but it's not what I had in mind: While almost all of the SCHIP-dedicated revenue would come from a 61-cent-a-pack increase in the federal cigarette tax, some would come from a huge increase in the federal tax on cigars. Currently limited to five cents a cigar, the tax would skyrocket to as much as $10 a stick, equal to 53 percent of the manufacturer's or importer's sale price.

Personally, I've never paid $20 for a cigar, and I imagine those who do buy such cigars could more easily afford this 20,000 percent tax hike than the average cigarette smoker can afford the proposed 156 percent increase in the cigarette tax. (Not only are cigarette smokers  less affluent, but they typically buy cigarettes much more often than cigar smokers buy cigars.) Still, even smokers of less expensive cigars would be hit by big price increases: A $2 cigar would cost $3 or so, a $4 cigar would be $6, etc. The St. Petersburg Times reports that cigarmakers are "in a panic."

The political rationale for picking on smokers is that it's easy. But from a public policy perspective, assuming SCHIP is either a sound investment benefiting the general public or an urgent matter of social justice, it should be funded by a broad-based tax, not one that singles out people with politically incorrect consumption habits.

The Heritage Foundation, which also highlights the regressivity of the SCHIP financing plan, criticizes the program's expansion, noting that it has been extended beyond the original target of poor children who are not quite poor enough to be covered by Medicaid and seems destined to become a new health care entitlement that crowds out private coverage and further strains the federal budget. A few weeks ago Robert Novak warned that SCHIP expansion is part of a stage-by-stage transition to completely socialized health care.

[via The Stogie Guys]

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  1. {wrings hands}
    But what of the children! You are a hard-hearted, cruel man Mr. Jacob Sullum!

    Oh wait, black marketeers can use them as lookouts for cops and expendable couriers, looks like it’s the up-and-up for Johnny Boy…

  2. I hate the children.

    Even the little ones.

  3. So, what’s a Black & Mild gonna run for? Not that I smoke those…or anything for that matter…

  4. I would just have to start bringing my cigars in from overseas. I might even invest in a smoke shop just over the Mexican border.

  5. R C Dean,

    That’s why we need a fence on the border. Screw the terrorists, we need to stop tax-free cigars from coming in to the country and poisoning our children.

  6. So, how would this affect the prices at the local Seminole Indian Smoke Shop?

  7. So, how would this affect the prices at the local Seminole Indian Smoke Shop?

    New York has been trying to tax our Indian shops out of existence for years, without success so far.

  8. If Bush doesn’t veto it, I’ll be making me some Injun friends right quick.

  9. Tampa may secede over this.

  10. This is really just a plot to make black market Cuban cigars cheap by comparison, not that I know anything about them…

  11. This is absolutely obnoxious!!!! We have a bunch of people on Capitol Hill absolutely drunk with power.

  12. Listen, even though we know that a tax on cigarettes is basicly a tax on the poor, we are not supposed to talk about that! Shhhhhhhssss!

  13. I would just have to start bringing my cigars in from overseas. I might even invest in a smoke shop just over the Mexican border.

    The govmint will just have to pass a law making it illegal to smoke any tobacco products anywhere in the world on which U.S. taxes have not been paid. See this story above:
    https://www.reason.com/blog/show/121488.html

  14. Grow your own…it ain’t that hard. 😉

  15. Who cares how much cigarettes and cigars cost?

    Doesn’t anyone think that the real flaw in this plan is funding health care for children with an activity that both doctors and insurance companies are encouraging people to stop? No smoking, no tax revenue.

    Can you say conflict of interest?

  16. This explains the other day when I was surfing through the radio, I landed on Rush and he was babbling about how he was the biggest celebrity cigar smoker and he’d keep smoking them even if they cost $100 a stick. I surfed on by after 90 seconds. But now I know what got his jibber jabber going.

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