Over at Just another Jewish Conspiracy, SerAndEz sings the praises of sin taxes.
I don't see sin taxes the same way he does. Especially not tobacco taxes. It's not that I like smoking; I don't. Tobacco taxes (and lawsuits) give politicians the chance to pose as protectors of the citizenry. But they're not. They're after a revenue stream.
One of the great perversities of the governmental war on smoking is the extent to which government profits from smoking. Jacob Sullum highlights the astonishing numbers in the May issue of Reason magazine. Last year, the tobacco industry's profit on a pack of cigarettes sold in the United States was 23 cents. On the same pack, the federal government collected 24 cents in taxes and the states collected an average of 36 cents. Incredibly, 72 percent of the net proceeds from tobacco sales goes not to Big Tobacco but to Big Government.
If smoking is as evil as portrayed by politicians they shouldn't be taxing tobacco. They should be banning it. The only reason smoking isn't banned is because it is the goose that keep on laying golden eggs for politicians who can't get their hands on enough tax revenue.
Here's an excellent illustration of that principle from "Addicted to Tobacco taxes"
Instead, the “cash-cow” coalition signed a national settlement that protected the profits of the tobacco giants so they can be milked periodically to replenish depleted state coffers.Now that same coalition is promoting Proposition 303, a statewide referendum on the November ballot to increase Arizona’s cigarette tax from 58 cents to $1.18 per pack—the nation’s fifth highest rate. The goal of 303 is to pay for a laundry list of programs, like expanded health insurance and funding for trauma centers. Those programs, desirable or not, are mostly unrelated to tobacco prevention.
...
In 1995, Arizona’s excise taxes were 58 cents per pack. According to Harvard economist Kip Viscusi, the state spent 1.12 cents per pack on tobacco-related medical care, and lost 1.55 cents per pack in payroll taxes due to smokers’ early mortality.Thus, the 58 cents per pack excise tax was more than 20 times the combined tobacco-related cost to the state of 2.67 cents. In short, smokers have more than paid their way.
Additionally the author of the essay points out that smokers are disproportionately poorer than the rest of the population so this is a regressive tax, to boot.
"Sin tax" is a label that confers a nobility to an enterprise that is little more than legal extortion.
I'm too cynical you think? Maybe. But lets consider another part of Sin tax post, the notion that government does good by making hybrid cars more affordable through tax credits.
In the case of hybrid cars, the government offers a tax incentive for people to buy a hybrid car over a regular car, by allowing a small tax deduction for those who own a hybrid car.
Yes it's wonderful that government seeks to make us more environmentally responsible. Yes it is truly noble. But what happens when government actually succeeds in this effort?
Let's pretend someone waves a magic wand and turns every car into a fuel-sipping, gas-electric hybrid. What difference would it make? The air would be cleaner.Oil imports would drop.
And the transportation budgets of Oregon, Washington and almost every other state would deflate like a punctured balloon.
In the end what's important is not whether behavior has been modified but whether or not the government gets the money it believes it's entitlted too. "Sin taxes" may sound good and noble, but in the end they're just another phrase meaning "government entitlement."
Technorati tags: Sin Taxes, Hybrid Cars.
Posted by SoccerDad at July 5, 2006 11:09 PM | TrackBackHeh. I was wondering if anyone would bring up the amount the government makes off tobacco already.
Anyways, point by point:
If smoking is as evil as portrayed by politicians they shouldn't be taxing tobacco. They should be banning it.
I disagree, as I noted in the post. People have the right to choose (to some extent) what they wish to do. Smoking is bad, but it's not anywhere near something that needs to be completely banned. Furthermore, at this point, a ban would be about as successful as Prohibition.
Now that same coalition is promoting Proposition 303, a statewide referendum on the November ballot to increase Arizona’s cigarette tax from 58 cents to $1.18 per pack—the nation’s fifth highest rate. The goal of 303 is to pay for a laundry list of programs, like expanded health insurance and funding for trauma centers. Those programs, desirable or not, are mostly unrelated to tobacco prevention.
I'm not sure why it matters whether the money is used for tobacco prevention or something else, and it really doesn't matter to me that they pay 20 times more than they cost. It really should not make any difference whatsoever, as long as it's used properly. That said, taxes should not be arbitrarily placed simply because they could, as I also noted in the post. They must be kept in control. Part of the point of the post was to set up a better alternative for revenue than an estate tax, though I haven't written that post yet. :)
Additionally the author of the essay points out that smokers are disproportionately poorer than the rest of the population so this is a regressive tax, to boot.
Actually, I think the reverse is true. By placing a higher price on the tobacco and cigarettes, it will hopefully discourage more people in the lower income ranges from smoking. Since more smoking creates a greater addiction, it leads to far greater expense; curbing the level of addiction alone would dramatically reduce the amount of money spent. People who actually quit (or, as is more likely, don't start in the first place) because of the price are complete bonuses.
Let's pretend someone waves a magic wand and turns every car into a fuel-sipping, gas-electric hybrid. What difference would it make? The air would be cleaner.
Oil imports would drop.
And the transportation budgets of Oregon, Washington and almost every other state would deflate like a punctured balloon.
Terribly weak argument. Clean air isn't worth money? Cheaper cars for the entire country aren't worth money? No need to pay for gas isn't incredible for the economy? This is the same argument unions try to make whenever an industry is dying or being replaced. Are there sacrifices when we make progress, in the short term? Of course. Hopefully, we can overcome that quickly and have far greater gains for the future.
Posted by: Ezzie at July 6, 2006 1:33 AMMy point that perhaps got somewhat obscured was that the government isn't really interested in changing behavior; it's interested in making money. By couching the new tax in terms of "doing good" it masks its real intention.
The fact that most of the tobacco money is used for projects having nothing to do with tobacco related illnesses (and that the money collected is much more than government loses to smoking related disease and death) gives lie to the pretext that government is going after tobacco just to recoup the money that tobacco cost it. (How these taxes are usually couched.)
The argument about the regressiveness is about what proportion of tobacco taxes are collected from the less well off. So maybe it will discourage some from smoking it still is regressive.
Finally I don't understand what's weak about pointing out that Oregon is ready to start charging per mile driving taxes. (And there's some talk of doing it nationally too.) It proves my point. Once the government encourages people to turn to hybrids it notices that its tax receipts fall. Then it needs money to make up for the shortfall so it ends up coming up with a formula to soak the people who did the right thing (with incentives or not) in the first place.
The government may say that it is imposing a tax to improve someone's behavior. But what it really wants is not to modify our behavior but to get our money.
While it may be ill-advised to outlaw tobacco products, the motivation behind taxing tobacco is to keep tobacco companies alive so they can be milked indefinitely.
Of *course* the government is trying to collect money. The point here is that there is a good that comes out of this collection, as opposed to other ones.
I don't find that most are couched to be "recouping losses". In my experiences (say, Cleveland), the "sin taxes" were blatant fundraisers for big projects, focused on causing some good when they need to take money via some form of tax.
I don't find the regressive argument compelling in this case, nor the tax receipts falling argument. People will still spend their money, just as they did with the tax cuts - they just will spend it in better ways. The government will still get their revenue, and the quality of life in the country as a whole will improve.
The government is not dedicated simply to taking the money of the people. It's dedication is to improving the lives of the people. That requires money in most instances, but when they can do so without money they are perfectly happy to - it means they can use the money saved elsewhere.
Posted by: Ezzie at July 6, 2006 3:29 AMIt's all relative, sin taxes seems like a wash to me. Casinos, governments making cash hand over first on gambling, encouraging gambling, passing laws to legalize it everywhere they can.. But gambling ruins lives, destroys families.
There's nothing altruistic about these sin taxes, and little good comes from them. They are cash businesses and nothing more, what easier way to rake in cash than to marginalize people who have been labelled 'sinners' and justify pilfering them all the while encouraging more 'sinners'?
Take 3rd party internet gambling in the US, this is a huge issue on the agenda today, does anyone think this is because the US wants to combat this sin!?
Please, the US is in collusion with the big Casino corps to get in on the action, the reason you can be prosecuted for this is because the online gambling outfits are all outside the us, do not get taxed and the money isn't flowing.. Soon Internet gambling sins will be legal, provided you pay the piper! The Big casinos, and the state coffers. Then the sin will be good, it will be 'regulated' sin.
How much of that money goes to 'good' pork barrel projects, and how much goes to curing all those 'bad' gamblers? How much of that tobacco tax goes to helping people get healthcare in the US? Or how much gas tax is going to finding alternative energy sources or protecting the environment..
Posted by: saus at July 6, 2006 10:43 AMEzzie writes: "The government is not dedicated simply to taking the money of the people. It's dedication is to improving the lives of the people. That requires money in most instances, but when they can do so without money they are perfectly happy to - it means they can use the money saved elsewhere."
OK - for 20 points, can Ezzie or anyone else give me a recent example of where our governments were "perfectly happy" to do something without asking for more money?
I mean, wouldn't banning smoking accomplish a great social good...and the government wouldn't have to spend money to do it (unless you buy into the unspoken liberal credo that claims all money as the government's; what is not collected in taxes is just what we're allowed to keep) "Perfectly happy"? they should be ecstatic to do it!!
And on the larger question of the so-called "sin taxes":
The sanctimonious crap that comes out of the nanny-staters' mouths when they try to justify their taxing actions is more harmful to my (mental) health than anything Big Tobacco produces to put into our mouths. I'm not a smoker (well, beyond the occasional cigar) but still resent the combined efforts of Federal & state authorities to demonize and pillage the smokers because I don't for a moment believe they have the smokers or the non-smokers best interest at heart - it is truly all about the money for them.
Of course, as a Marylander, my view on government may be skewed - it has been years since I would describe my state and local governments' dedication as intended towards "improving the lives of the people." (Mike Millers? Yes! Parris Glendenings? Yes! just not the people's)
Posted by: Maryland Conservatarian at July 6, 2006 11:04 AMI am in favor of sin taxes. Of course with regards to the government it's about the money. But the bottom line is that conservatives oppose any and all taxes. But the money to carry out the government's business has to come from somewhere. I'm curious as to how you people think such things as education, infrastructure, national defense etc. is going to be taken care of?
Posted by: Laura at July 6, 2006 12:05 PMLaura - conservatives don't object to any and all taxes. We know that governments need money to run and that the best way to raise that money is often taxes. We disagree on what a government should or should not be doing.
Ezzie - By passing sin taxes government is picking on habits that have little defense in society and the people who have those habits. If a legislator said, "We have X smokers in this state, we want to discourage smokers so that there will only be X - Y smokers," I could respect that. The problem is that the legislators want an open ended tax to fund whatever their pet projects are. If there's no stopping point then it is a very cynical way to raise money.
Posted by: soccer dad at July 6, 2006 8:14 PMThe very worst thing about SIN TAXATION, is that it causes more illegal trading. In other words, when you make a pack of cigarettes too high, people smuggle. Even nice people enter the trade.
Awhile back Michael J. Totten spoke about how a taxi driver tried to set him up at the border, when he was leaving the Kurdish/Iraqi area. To go over the bridge. Back into Turkey. (He got rid of the cigarettes! Worried that there being in his own backpack would complicate his life. I think he threw them off the bridge. Before arriving at the depot with the custom's officials.)
But again, your average taxi driver (so far) isn't a criminal. And, they do stuff like this only for the money.
So you can drive people to sin! And,to illegal acts. For what? The tax money doesn't cover the costs of what follows.
Perhaps, at one time people were so relegious, you could sell them bad ideas; and like Will Rogers said (about the Bible Belters voting FOR Prohibition) ... "that they'd stagger to the polls to do so."
Bad law is bad law. We shouldn't encourage it at all.
And, you'd be surprised. One kids see their parents end up ill from years of smoking, it sends them against the habit, rather than towards becoming smokers. How do I know? My dad smoked. Died of lung cancer. Cut years off his life because of his habit. And, I have a smooke-free home. Even though I draw the line at this. You can't smoke IN my home. But you're still free to do what you want, elsewhere.
The best lessons people learn come from experience, anyway.
Posted by: Carol Herman at July 6, 2006 11:49 PM