The truth about cigarette taxes

As you probably know, I’m not a proponent of higher taxes. Including the ones disguised as public health policies. Like cigarette taxes.

Lots of politicians advocate higher taxes on cigarettes as a way to discourage smoking. But is this really why politicians like Maryland’s Governor Martin O’Malley support higher cigarette taxes?

The fact is, politicians like Governor O’Malley aren’t really interested in the health of their constituents. You see, hefty cigarette taxes are simply a back-door way to keep their coffers funded.

But ulterior motives aside, does raising taxes on cigarettes even do what it’s supposed to do…curb smoking?

I’ll answer that question in a moment, but first let’s back up.

As I mentioned earlier, I first met O’Malley in 2006 when he was newly elected as Governor. He asked me to help devise a pilot program to provide nutritional supplements to schoolchildren to improve their performance.

The program was welcomed not only by the Governor’s office, but by parents, teachers, school nurses, well-intentioned local funders, and community leaders. Then we were stabbed in the back by an “expert” mainstream medical “know-nothing” (now, of course, ensconced at the FDA–perhaps that was his reward). And the state shut it down before it even got started.

But I never forgot about Governor O’Malley’s lack of backbone on this issue.

I came across Governor O’Malley again during the contentious state elections of 2010. Many courageous politicians around the country were fiercely fighting about ever-expanding taxes and public employee entitlements.

I saw Governor O’Malley on the national news one night, smugly proclaiming that they weren’t having any such problems in his state. When the reporter asked him how, he said, why, we just keep raising taxes, of course.

And that they do. In fact, Maryland has one of the heaviest tax burdens of all the U.S. states. Especially on cigarettes.

Many other states, like neighboring Virginia, realize that they can’t keep taxes high and still have a viable economy, let alone an economic recovery.

But Maryland hasn’t caught on (and they don’t really need to because they are essentially subsidized in large part by the deficit spending of the federal government right next door).

In the quiet of this summer, the Maryland General Assembly tried to sneak in higher cigarette taxes. And many other states did too. After all, nobody really minds a little more discrimination against and punishment for smokers.

Income taxes and most other taxes are too popular among too many politicians. They feed the government and all their special interests.

But lawmakers tell us cigarette taxes are different. They only raise cigarette taxes to discourage us from taking up the habit. Or to encourage people to stop. And they’ve been taxing cigarettes higher and higher for so long now, you would think everyone would have quit long ago.

In fact, the federal government first started taxing tobacco products back in 1794. This policy began shortly after the Whiskey Rebellion. This rebellion erupted because of the early government’s new tax on whiskey. It also caused George Washington to don a uniform for the first time since the Revolutionary War. And it brought down the U.S. government under the original Articles of Confederation in 1787. And led to the creation of the U.S. Constitution with the Bill of Rights.

So, you would think the federal government would have learned its lesson. And left us very well alone. But it didn’t.

In 1921, states got in on the action when Iowa became the first state to impose a tobacco tax. They did this during Prohibition, when tax revenue from alcohol sales had “dried up,” so to speak.

Today, every state in the union imposes its own tax on cigarettes. And over the last 10 years, it’s gotten much worse.

In fact, since 2002, states and U.S. territories have increased cigarette taxes at least 105 times. That’s at least twice for each and every state in the union over just 10 years.

New Yorkers, no surprise, under America’s nanny mayor, pay the highest rate at $4.35 per pack. And that’s on top of the federal cigarette tax of $1.01 per pack. And the fed tax rate keeps climbing too. Just three years ago, the federal cigarette tax was just $0.39 per pack.

The government now takes far more revenue per pack than is earned by tobacco farmers, manufacturers, retailers, or shareholders..

But what about the bigger “public health” issue? Do all these taxes result in less smoking? Or any improvement in public health? Or, is it just an easy source of revenue for big government?

The government claims that a 10 percent increase in the price of cigarettes results in a 3 percent reduction in cigarette consumption.

But these claims just don’t square with actual results.

We know that low- and middle-income groups always feel the biggest hit when any consumer product “staple” increases in price. Yet tobacco consumption continues to rise rapidly among low- and middle-income populations worldwide, and persists in low and middle-income taxpayers in the US.

Now, let’s look at it another way…

If cigarette taxes were effective as “health policy,” then higher taxes would be even more effective, when it comes to causing lower income groups to quit, right?

But that’s just not the case.

In New York, where cigarettes cost the most, researchers looked at cigarette smoking among men and women in households that earn less than $25,000. In 2004, they spent 11 percent of their income on cigarettes. By 2011, they spent a whopping 24 percent of their earnings on cigarettes. So, in just seven years, they more than doubled the percentage of their income spent on cigarettes.

Yet, they continued to smoke about the same amount!

This is pretty discouraging news, when you consider that these same households spend only 20 percent of their earnings on food. And they have food stamps for that.

This is yet another government public “health” policy that, according to the facts, has nothing to do with health. And everything to do with revenue. When it comes to the government’s “war on tobacco,” raising taxes is a complete failure. But it works quite well to keep filling government coffers higher and higher

And policymakers in many states are now beginning to realize it. Just not in New York. Or in Maryland.

No wonder O’Malley thinks he’s riding high these days. He’s got plenty of money in the coffers, and the votes of all those minions who depend directly, or indirectly, on the state and federal governments. And he’s even eying a run for the White House in 2016. After all, he would have quite a short commute from Baltimore down to Washington.

Of course, he won’t be able to brag about his track record on taxes while stumping on the campaign trail. But then again, a poor track record on taxes never stopped anyone from entering public office before–at least not in Maryland.

And yet another “tax” on cigarettes is about to roll out as part of the full fury of Obamacare.  Under Obamacare, starting next year, there will be a hefty “surcharge” (tax) to buy health insurance for smokers. Of course this “surcharge” will disproportionately hit lower income households–the very people the President says he is trying to help with “affordable” health insurance.

Further, Obamacare is supposed to stop discrimination against people with “pre-existing health conditions.” For decades now, the government has defined cigarettes as a health problem, and smoking prevention and cessation as the only “treatments.” Smoking, then, should be considered a pre-existing condition. And Obamacare isn’t just allowing discrimination against this pre-existing condition–it’s actually mandating it.

The only thing that is more abundant in Obamacare besides new taxes is the level of hypocrisy.


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