Obama's First Tax Hike Takes Effect


Today the federal cigarette tax rose from 39 cents to $1 a pack. This is the first tax hike signed by President Obama, and it breaks his promise not to raise taxes on people of modest means. In fact, it's pretty much the most regressive way Congress could have picked to fund an expansion of the State Children's Health Insurance Program. Still, the federal tax pales in comparison to the cigarette levies imposed by many states. The highest right now is New York's, which is $2.75 a pack, on top of which Big Apple residents pay a $1.50 city tax, for a total of $5.25 in federal, state, and city taxes, plus the 8.4 percent sales tax, all of which pushes the retail price to $9 or $10. Since taking money from an unpopular minority is a lot easier than imposing a broad tax hike or cutting spending, many states are likely to raise their cigarette taxes this year.