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Repeat After Me: Tax Increases Are A Bad Idea

By: Pejman Yousefzadeh (Diary)  |  April 4th, 2009 at 04:14 PM  | 

RESIZE: AAA

I have no problem using taxes as a way to get rid of certain, discrete negative externalities, but anything beyond that is asking for trouble. So it is more than a little bizarre to find out that there are Florida Republicans behind a $1 per pack increase in cigarette taxes. Cigarettes are nasty things, but if you are trying–as these Florida Republicans are–to raise revenues via cigarette taxes, then you are bound to be disappointed in a big way.

The policy failures inherent in this approach are bad enough. The political failure is that we have Republicans acting like Democrats. I thought that the past two election cycles were sufficient to show that when Republicans run as Democrats, they lose. Evidently not.

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COMMENTS

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  • randy streu

    like through “fat taxes” and cigarette taxes.

    Whether to “raise revenue” or not, it certainly disturbs me when Republicans sign on for this sort of thing.

    • clifwest

      All of those who allow one segment of our population to be victimized like this are inviting the same thing to be done to them. I don’t drink, so a dollar or two tax on a can of beer wouldn’t affect me at all. Tax beer. I don’t eat candy so a .50 cent tax on every candy bar wouldn’t affect me at all. Tax candy. I don’t eat any fattening food at all and weigh the same now as I did fifty years ago. Tax all fattening food. I don’t wear or use running shoes, never have. Put a ten dollar per pair tax on all running shoes. Obesity is as bad for you as smoking so tax all people who are overweight according to how much overweight they are. I am at the right weight for my age and height, so I wouldn’t be affected, so go for it. Trust me, after cigarettes have been taxed so that no one is smoking, the politicians will start in on something else and beat it to death, they always do because you let them.

      • gazill
  • Wing Zero

    Doing the same thing over and over and expecting different results.

    Based on this definition, I think everyone elected to government bodies must be insane.

  • http://www.leadingstrategies.net Mike Friesen

    It is surprising to me the pain threshold is still not high enough for some in the GOP. Perhaps there are some who simply will not get it and need to be voted out. Republicans need to be about principle, not political maneuvering.

  • http://nighttwister.blogivists.com NightTwister

    It’s going to continue for the foreseeable future. Conservatism is fine so long as it’s someone else’s handout that’s being taken or some other group’s rights being infringed.

  • semperfione

    To that “MAN CAUSED DISATER” P. Yousef……
    There is a difference between a Republican and a RINO. Since you were not born on American soil, please allow me to school you. The Liberal Democrats and the Rino’s behind the cigarette taxes are little, short, Henry Waxmans (D-Calif). These 400 plus little, short, Henry Waxmans believe that the American People should be remade in their own image, ride bicycles, eat grass, and live in caves with no electricity. Cigarettes are nasty little things? Well so are suicide bombmers! I guess you could school me on that. The problem is the Waxmans in Congress hate the Smokers and love the suicide bombmers. That’s why they are closing GITMO. How about a Punitive Tax on foot bathes, prayer rugs, and suicide bombmers. These “Man Caused Disater”, suicide bombmers, are killing more people a year than Smokers kill in a generation. Punitive Taxation is wrong, regardless of who is behind it. Hope you learned something…you may be next on the TAX hit list.

    • http://hillbillypolitics.com Steph C

      You stepped over a line here. If you had been here longer than 9 days, you’d know that Mr. Pejman is not only a well respected diarist here but a well respected Front Page diarist.

      I suggest you do some reading… a lot of it… since Mr. Pejman has been here for years; longer than a lot of us. After you’re done reading some of his diaries, perhaps you’ll think about offering him an apology.

      I’ve seen some other comments from you and if you’d take the time to calm down, think about what you’re going to say, and learn to use paragraph breaks, you might have some input that people want to read.

      Then again, Mr. Neil seems to be in the mood for blamming.

      • pilgrim

        .

        • http://hillbillypolitics.com Steph C

          Even as I typed that he was somewhere else putting up a junk post.

        • http://www.hakubi.us/ Neil Stevens
    • George Claghorn
    • Doc Holliday

      and what does that have to do with anything? Pej knows more about pollitics, Republicans, and libertarian ideas than you sir. I disagree with Pej’s comment that he has no problem with using taxation to change people’s bad habits, in fact it seemed like a non sequitor since the rest of his argument is against said taxation. Pej normally takes the libertarian side of things, I think he is doing so here other than that one liner. I would like him to elaborate but he rarely responds to comments.

    • Pejman Yousefzadeh

      and I have been an American citizen since birth. Additionally, I need not be “schooled” by someone who quite clearly cannot write, and whose cognitive skills have surely suffered as a consequence of too much tequila and a lobotomy.

      • mbecker908

        he even somehow missed the fact that you are a… Jooooooooooo.

        Not to mention the country of origin of your family, which should be more than enough fodder to fuel conspiracy theories ’till hell freezes over.

        Welcome back. I got a tingle in my leg when I saw you had a post on the front page!

      • Jack_Savage

        Tequila. I knew it.

      • http://moelane.com/ Moe Lane

        Maligning tequila in such a fashion. It’s not like it can run away from being consumed by the unworthy…

        • http://www.ssce.net/Web-Articles/Web-articles-indexed-authors.html#authors-l JLenardDetroit

          why else would he malign the tequila, as you put it

          those straight-shooters … er… shots… are competitive ;-) lol

    • bs

      A smarmy little troll like you should be well aware of “nasty little things”.

      Hope you enjoyed your 9 days here, Sparky.

      • http://hillbillypolitics.com Steph C

        Kinda makes me wonder what’s going on that they are spending so much time here wondering if we know about it yet.

    • David Hinz

      worst imitation of a conservative that I have ever seen.

      In the old days Mobies had class…

    • ocleverone

      I hope someone gets out a very special, very gigantic Blam stick for you.

  • GregInFla

    Thad Altman is called by our local conservative talk show host Bill Mick as “Thad the Impaler”. He has not seen a tax he did not like. So many programs were added here in Florida since 2004, and no one wants to kill any of those. We have the state paying for pre-K for everyone. Glorified day care being paid by the RINO governor Crist. Some people want to Crist to take Martinez’ US Senate seat in 2010 so he can be in a more comfortable place around like-thinking people – Washington, DC

  • jabley

    If they’re looking to create revenue, they will fail, but I’m going to be the outlier here and congratulate these guys on the overall effect this policy will likely have.

    Why? Because the other important angle here is cost reduction. What does it cost the state Medicaid systems to take care of smokers’ self-inflicted heart disease and cancer? The revenue creation angle to this is weak, but as you point out the externalities here are significant (the tax dollars of non-smokers going to treat self-inflicted cancer being a key one). I’m not a fan of taxes in general, but I’d be more than happy to raise taxes on cigarettes up to the point that it sufficiently reduces smoking behavior to the point that revenue collected covers the cost of treatment (your references seem to help establish the demand curve here). Make it $100/pack for all I care and let them pay for their own medical bills with the taxes they pay.

    • Adjoran

      Smokers do incur higher health care costs at a younger age than non-smokers, but they die younger, too, and collect less total benefits.

      Meanwhile, since everybody dies of something, the non-smokers eventually match and exceed the health care costs of the long-dead smokers, having sucked at the public teat far longer in the interim.

      • Jack_Savage

        His concern for smokers is admirable, but as usual, taxes have unintended consequences.
        Well said.

        • Doc Holliday

          down with a multitude of facts, but I have said it all before, if anyone cares just read my comments. I tire of so called conservatives that support the nanny state simply because they are not affected personally by a specific tax or infringement. Will they ever learn that the precedent is the key? Will they ever learn that once we countenance tyrannical taxation they can use the method on behavior they don’t like?

          Well I could make a list of why government interference in the free market always fails but I will just say one and move on. hey Jabley, what do you think crime will increase or decrease because of this oppresive tax? If you are not sure I suggest you study prohibition. Furthermore, there has been a black market in cigarettes for decades, as the taxes increase, so does the black market.

      • jabley

        Medicaid patients are 74% more likely to be smokers than the population on the whole (34.3 (Medicaid)/19.7 (all) = 1.74). Reference: http://www.ncbi.nlm.nih.gov/pubmed/19012845

        I don’t appreciate paying taxes to support the healthcare of people who are disproportionately irresponsible relative to the general population.

        Plus, the data you cite above are to my knowledge old, and do not fully reflect the costs of the new (very expensive, yet typically futile) chemotherapies and biological agents used to treat many smoking-induced cancers. If you have some economic data on this that is recent, and which accounts for the true end-of life costs of dealing with these patients, it would be a more convincing argument (and I would be personally interested).

        Economics aside, as a general rule I like to see people live. I’ve lost enough loved ones due to tobacco use. Tax the hell out of it.

        • Doc Holliday

          fact, medicaid is for the poor. fact, the poor smoke at much higher rates than the wealthy. You figure it out.

          • jabley

            they are also significantly more likely to stop smoking as a result of taxes than the affluent. The price elasticity is approximately 2X. http://www.cdc.gov/mmwr/preview/mmwrhtml/00054047.htm

            Switch to decaf, Doc.

    • http://andrightlyso.com/ civil_truth

      ..including health care costs.

      In practice, the politicians have raided such compensatory taxes for other purposes, viewing cigarette taxes as a revenue source for their pet projects.

      I’m still ticked abou the MSA for the tobacco litigation some years back and how most states stole the money from its intended uses. Some even issued revenue bonds against future revenues so they could spend the money now.

      So I have mixed feelings about the taxes for these purposes in practice, due to the corrupt politics and the addictiveness of these taxes for politicians.

      However, I sense a disconnect between those who both rail against cigarette taxes andwho also argue for taxing what are now illegal drugs in lieu maintaining the current prohibition. Since, cigarettes are drugs. you really need to support taxes for cigarettes if you want to legalize and tax other “recreational” drugs.

      • Doc Holliday

        secondly, I believe tobacco is a legal product and is already taxed more than any other. Do we think taxes on cigarettes are a new thing? At what point did the tax offset the effects of smoking? do you know? I know you and Jab don’t. Do you think the government will finally stop taxing cigs when they feel they have stolen enough money to offset the harm? I am not holding my non tar free breath.

        • Doc Holliday

          I don’t smoke, but I also don’t change my core views to fit my personal habits.

      • http://hillbillypolitics.com Steph C

        Social Security in the General Funds and regulary raid it for projects that have absolutely nothing to do with Social Security?

    • Doc Holliday

      when they getting around to taxing haughty attitudes and indifference to the liberties of others. If smokers cause the state so much, then that is because the state is too powerful already. When a smoker buys insurance, he pays more, the insurance companies know more about the relative cost of smoking than you do.

      I guess you have never heard about the camel getting his nose under the tent. I guess in this case it should be Camel tm. Anyway, I am tired of these arguments among conservatives, in my opinion, anyone who supports this type of taxation is not a conservative because they have no understanding of the core philosophy. They want to divide and conquer us, they want people to be morally confused, they know what they are doing and you do not.

  • Adjoran

    to the Congress, when they realize they cannot repeal the Law of Diminishing Returns.

    Congress should understand Friedman’s statistical work which proved the (seemingly intuitive to all but politicians) assertion: when you tax something, you get less of it, and if you subsidy something, you wll get more of it.

    Using that knowledge, Congress could craft a legislative work-around. Since the higher taxes mean fewer people will smoke, which in turn causes shortfalls in the revenues expected from the tax, it is obviously necessary to subsidize the cigarettes themselves. The straightforward subsidy to offset the tax doesn’t exactly enhance revenue, either, so a more creative approach is called for.

    GIVE the cigarettes FREE to kids under 18. By the time they’re adults, they will be hooked and a certain percentage of them will continue smoking even at the higher costs, certainly far more smokers than would be out there otherwise. Granted, some of them will need further subsidies, but because smokers live shorter lives, we will eventually make it up in fewer Social Security checks going out.

    Everybody wins! And what could possibly go wrong?

  • E Pluribus Unum

    Is that we keep losing because we haven’t gone leftward *enough*.

    Silly RINOs.

  • Old_Crow

    Wall Street wizzzzz kid, Corzine tried it two years ago. It actually resulted in millions less in taxes.

    Depends on how far into the pain threshold the tax increase is. Increase taxes high enough and behavior changes. Buy your smokes online, at Indian reservations, tax stamp free at your local bodega, or from the trunk of a car…

    No free lunch for greedy legislators.

    • tnjim

      I’m afraid the kids this tax is supposed to help will be sorely disappointed

  • smitch61

    I have never understood how they have been able to tax,tax,tax, smokers on a legal product. How is it legal to single out one group of people? I guess the same way they can single out CEO’s and businesses etc. Crazy

    • Doc Holliday

      will get their wake up call soon enough. They should not expect help from smokers though, nor would they deserve it.