Archive for the ‘SCHIP’ Category

On April 1st the LARGEST federal tobacco increase in HISTORY took effect. The tax collects $32.3 billion in new tax revenue over the next 4.5 years and it’s Obama’s first step in socializing our healthcare system.

The tax was included in the bill tp expand State Children’s Health Insurance Program (SCHIP). The new tax provides healthcare to children of families who are (wait for it) too well-off to qualify for Medicaid.

Obama said; 95% of the population would not see tax increases under his administration, however as with many of his campaign PROMISE’S “Change Has Come” in the form of taxation.

This tobacco tax falls squarely on the 95% who were to be sheltered from his “No Tax Increases”. Voters must know they will be paying for ALL of Obama’s socialist programs for the (hopefully ONLY) 4 years!

Smokey

When I first heard about the tax increase on tobacco that will go into effect on April 1, 2009, I thought this just affected those who smoke.

When the tobacco tax increase for child health care went into effect here in Arizona on January 1, 2007, Arizona became the fourth highest state in the nation for tobacco tax. When The Children’s Health Insurance Program Reauthorization Act of 2009 goes into effect next month, smokers in Arizona and nationwide will be paying much more to smoke.(1) In Arizona as well as nationally, the new tax will increase some tobacco products by more than 2000 percent.

Although this is written from the viewpoint of someone from Arizona, taxing tobacco by so much will bring unintended consequences to Arizona and to the nation as a whole:

Smuggling Across the Mexican Border

Arizona has many problems related to drug smuggling and Phoenix is now second in kidnappings in the world.(2) When the tobacco tax goes into effect next month, this new tax will raise the actual price of a one-pound bag of tobacco from about $15 per pound to $40 per pound thus raising the actual cost for a one-pack-a-day smoker from $30 per month to $80 per month. That will make tobacco smuggling from Mexico much more profitable and the crime we have here will only increase.

The Arizona Department of Revenue website states that “cigarette and tobacco product tax evasion is accompanied by an increase in thefts, hijackings, and cross-border smuggling, counterfeit cigarettes, and black market sales”.(3a) What money is made in increased taxes from tobacco may well be paid out in increased costs for enforcement and to combat crime involved with tobacco smuggling. Arizona is already set up to recover revenues lost to tax evasion(3b) and the federal government will begin a study to determine the loss of revenue to tobacco smuggling across the border and how to recover lost revenue from cigarette smuggling from Mexico.(4)

Increased Cost in Mental Health Care

Cigarettes are often used as a way of self-medicating by people who have anxiety and/or depression. And when they quit smoking, a significant number of people who have major depression will have a new depressive episode.(5)

Major depressive disorder is the leading cause of disability in the U.S. affecting 1 in 5 families nationwide. An estimated 1 in 4 adults has a diagnosable mental disorder.(6) Yet funding for mental health in Arizona has been cut. Healthy Families (a program to help families dealing with depression and domestic violence) has been eliminated statewide.(7a) And people who have lost their jobs often lose their health insurance. As a result, our hospitals and emergency rooms and/or prisons will be the more expensive alternative. Since the closing of mental hospitals in the 60’s, jails and prisons throughout the U.S. have become our nation’s largest psychiatric facilities. (8)(9)(10)(11)

Increased Domestic Violence

Particularly during this time of economic difficulty now may not be the time to quit smoking, especially when it is not out of choice. With many people out of work and few jobs available, the result may well be increased domestic violence. According to some sources there already is an increase in domestic violence due to the economy.(12) Add to that people being forced to quit because they cannot afford it and this is a recipe for disaster. And yet, a few months ago the Maricopa County Tobacco Prevention Program stopped offering stop-smoking classes. And the mental health funding of Healthy Futures here in Arizona has been drastically cut.(7b) Further, when people lose their jobs and also lose their health insurance, counseling may be financially out of the question.

Otherwise Law Abiding Citizens Could Become Criminals

People who smoke and who now cannot afford it will try to find ways to continue smoking. It may be as simple as crossing a state border, ordering tobacco products from another country such as Canada or even buying cigarettes on the black market.

According to the Arizona Department of Revenue “under Arizona Revised Statutes 42-1127 any person who evades the reporting, assessment or payment of cigarette or tobacco product taxes that would otherwise be due may be guilty of cigarette or tobacco tax evasion. Violators are subject to fines and/or jail time”.(3C) As a result, normally law-abiding people who are not criminals may unintentionally become criminals. Yes, ignorance of the law is no excuse; however, these laws have not been well publicized. And although it is doubtful that anyone would go to prison for avoiding the tax, some teenagers may be the unwitting buyers who could end up with a conviction on their record for the rest of their lives.

This may sound far-fetched; however the result of excessive tobacco tax may be that “law-abiding citizens learn to break the law routinely, and states respond by adopting intrusive and sometimes abusive tactics to catch them”.(13)

The United States already spends $200 billion dollars per year to keep people in prison. (14b) Approximately half of those incarcerated are non-violent offenders.(15) Today 1 in 100 adults in The United States is incarcerated(16) and as many as 31 in 100 are currently either in jail or on probation.(17) As a society we do not need to increase the number of people in jail because of non-violent offenses. And we do not need to add more to our already overburdened courts. We simply can’t afford it.

Prohibition Doesn’t Work

With the taxes on tobacco being raised so high - in essence, this amounts to prohibition - particularly for the poor and those on a limited budget. We learned (or should have learned) when alcohol was prohibited in the U.S. that morality and/or personal choices cannot be legislated. Experience has shown that prohibition didn’t keep many from using alcohol, but only created criminals out of those who continued to use the substance. Bathtub gin not only was illegal, but made many sick. And Prohibition created an opportunity for anyone who found that selling illegal alcohol paid off.

“Violence was common in the alcohol industry when it was banned during Prohibition, but not before or after. Violence is the norm in illicit gambling markets but not in legal ones. Violence is routine when prostitution is banned but not when it’s permitted. Violence results from policies that create black markets, not from the characteristics of the good or activity in question.” (18a) As shown during Prohibition, the cost to society as a whole was immense.

The Tobacco Tax Will Not Sustain SCHIP

Although the proponents of the tobacco tax say this tax on tobacco products is a stable source of income, according to the Heritage Foundation, 22.4 million new smokers will be needed by 2017 in order to produce the revenues that Congress needs to fund SCHIP. (19)

The tobacco manufacturers have increased the addictive substances in tobacco over the years. Menthol cigarettes have been found to be most addictive - yet those are marketed towards teens. (20) However, with the new tax, quite a few people will not be able to afford to continue to smoke and will quit. Thus the way to get 22.4 million new smokers very possibly could be through more aggressive advertising towards teens.

Few people get through life without making some choices that affect their well being or cost society in one way or another - whether it be eating or drinking too much, driving too fast, not exercising or being financially irresponsible. But when any minority population is taxed excessively, the consequences to Arizona and to our nation may be much more than what was intended.

1. Alcohol &Tobacco Tax & Trade Bureau http://www.ttb.gov/main_pages/schip-summary.shtml

2. Brian Ross, Richard Esposito and Asa Eslocker, “Kidnapping Capital of the U.S. A”, Feb 11, 2009, ABC News abcnews.go.com/Blotter/story?id=6848672&page=1.

3. Arizona Department of Revenue www.azdor.gov/criminalinvestigations/Tobaccomenu.htm

4. Children’s Health Insurance Program Reauthorization Act of 2009, Section 703 www.govtrack.us/congress/billtext.xpd?bill=h111-2

5. Arizona Smoker’s Helpline “Ashline Quit Facts”
www.ashline.org/downloads/factSheets/depression_000.pdf

6. National Institute on Mental Health www.namiwnc.org/facts.html

7. Michelle Reese “DES Cuts Mean Children’s Services Slashed” Feb. 21, 2009 East Valley Tribune
www.eastvalleytribune.com/story/135783

8. Adam Liptak “1 in 100 U.S. Adults Behind Bars, New Study Says” Feb. 29, 2008, New York Times
www.nytimes.com/2008/02/28/us/28cnd-prison.html?_r=1

9. Bernard E. Harcourt “Mentally Ill Behind Bars Jan. 15, 2007 University of Chicago Law School
http://www.law.uchicago.edu/news/harcourt-mentally-ill-prisoners/index.html

10. Joanne Mariner.. “Prisons as Mental Institutions” Oct. 27, 2003
http://writ.news.findlaw.com/mariner/20031027.html

11. Mindy Herman-Stahl, Marni L. Kan, and Tasseli McKay, “Incarceration and the Family: A Review of Research and Promising Approaches for Servicing Fathers and Families”, Sept. 2, 2008
aspe.hhs.gov/hsp/08/MFS-IP/Incarceration&Family/ch2.shtml

12. Sally Kalson, “As economy falters, rise seen in domestic violence” Nov. 2, 2008. Pittsburg Post Gazette
www.post-gazette.com/pg/08307/924499-51.stm

13. Richard E. Wagner, Ph.D., “State Excise Taxation: Horse-and-Buggy Taxes In an Electronic Age” The Tax Foundation
http://www.taxfoundation.org/publications/show/522.html

14. “Facts About Prison System in the United States”, October 2007
webb.senate.gov/pdf/prisonstwopager.html

“Mass Incarceration in the United States: At What Cost?”, October 4, 2007, U.S. Joint Economic Committee Hearings, Washington, DC
http://jec.senate.gov/index.cfm?FuseAction=Hearings.HearingsCalendar&ContentRecord_id=7a22e2ab-7e9c-9af9-7bb7-4a1b88554f61&Region_id=&Issue_id=
15. Bureau of Justice Statistics Criminal Offender Statics www.ojp.usdoj.gov/bjs/crimoff.htm

16. Adam Liptak “1 in 10 U.S. Adults Behind Bars, New Study Says” Feb. 29, 2008 New York Times
www.nytimes.com/2008/02/28/us/28cnd-prison.html

17. “One in 31 U.S. Adults are Behind Bars, on Parole or Probation” The Pew Charitable Trust
http://www.pewtrusts.org/news_room_detail.aspx?id=49696

18. Jeffrey A. Miron, CNN Editor’s note: Mar 24, 2009
www.cnn.com/2009/POLITICS/03/24/miron.legalization.drugs/index.html

19. Michelle C. Bucci, William W. Beach “22 Million New Smokers Needed: Funding SCHIP Expansion with a Tobacco Tax” July 7, 2007 Heritage Foundation
www.heritage.org/research/healthcare/wm1548.cfm

20. Kreslake JM, Ferris Wayne G, Alpert HR, Koh HK, Connolly GN. “Tobacco industry control of menthol in cigarettes and targeting of youth and young adults”, American Journal of Public Health, 2008; 8(9):1685-92

Courtesy: www.Headsupusa.com

Thanks to President Barack Hussein Oteleprompter’s promise to not raise taxes on any family making under $250,000 a year (or $200,000 as an individual), some friends and I have decided that it’s a good time to quit using tobacco products. Because, after all, the new tobacco taxes only affect the rich. Or at least they will, because now only the rich can afford them.

On Tax Day Tea Party Day, we are giving up smoking. Wish us luck!

Personally, I’ll start by going cold turkey. If it gets to be too much to bear, I’ll try the patch or the gum. I’m not all that comfortable looking at Chantix or other things of that sort.

But we will not, after the 15th of April, contribute to the S-CHIP program by purchasing another tobacco product. I know, we’re cold hearted bastards for not wanting to provide government run health insurance to children up to age 30.

Courtesy: www.michellemalkin.com www.ace.mu.nu/

You’ve cowered in dark out-of-the-way smoking areas, hidden in the shadows, and tried to grab a quick smoke while standing in the rain for too many years!! You wish you had a dime for every time someone informed you that smoking is a filthy habit and is bad for your health. You’ve spent a small fortune on breathe mints to avoid offending others. We know, it’s been rough out there on the minority of smokers like you.

But now it’s time for you to come out into the sunlight with the rest of humanity, and to be proud that you’ll soon be supporting a government spending program that was defeated just the year before!! Because now, thanks to our government legislators, you’ll funding the SCHIP (State Children’s Health Insurance Program), like it or not.

That’s right, as a current smoker, you can now be referred to as a ‘supporter of the SCHIP Program’. As of April 1st, you’ll become part of an elite group, a group that is truly doing good for a ChangeTM, so to speak. Dare we say, you should feel good about it? However, we realize this is not likely the case.

We’re Here to Help
We will do our very best to help you see this huge punitive tax, that you’re being singled out for, in a whole new way. You begin to see that this is more than a Bill to provide healthcare for children, but rather, as President Obama said, this program is “the first step” to achieving universal health coverage in the U.S. (Freking/Elliot, AP/San Francisco Chronicle, 2/5).

Here at Smoke For The Children, our aim is,

“To raise awareness of the need for millions of volunteers who would like to be ‘supporter’s of SCHIP’; while encouraging current ‘supporter’s of SCHIP’ through information, forums and humor.”

As Congressman Tom Perriello from Virginia, who voted Yes on the SCHIP bill put it, “This program targets working families who are climbing their way out of poverty…” He is absolutely right!! At Smoke for the Children, we couldn’t agree with him more! We will talk about this plus a whole lot more as the site gets going.

Please check back frequently for news and updates. Pull up a chair and make yourself right at home. Of course ‘supporting SCHIP’ is always permitted here.

God Bless you for “giving a SCHIP” and ‘supporting SCHIP’.

WASHINGTON (AP) - One of President Barack Obama’s campaign pledges on taxes went up in puffs of smoke Wednesday.
The largest increase in tobacco taxes took effect despite Obama’s promise not to raise taxes of any kind on families earning under $250,000 or individuals under $200,000.

This is one tax that disproportionately affects the poor, who are more likely to smoke than the rich.

To be sure, Obama’s tax promises in last year’s campaign were most often made in the context of income taxes. Not always.

“I can make a firm pledge,” he said in Dover, N.H., on Sept. 12. “Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

He repeatedly vowed “you will not see any of your taxes increase one single dime.”

Now in office, Obama, who stopped smoking but has admitted he slips now and then, signed a law raising the tobacco tax nearly 62 cents on a pack of cigarettes, to $1.01. Other tobacco products saw similarly steep increases.

The extra money will be used to finance a major expansion of health insurance for children. That represents a step toward achieving another promise, to make sure all kids are covered.

Obama said in the campaign that Americans could have both—a broad boost in affordable health insurance for the nation without raising taxes on anyone but the rich.

His detailed campaign plan stated that his proposed improvement in health insurance and health technology “is more than covered” by raising taxes on the wealthy alone. It was not based on raising the tobacco tax.

The White House contends Obama’s campaign pledge left room for measures such as the one financing children’s health insurance.

“The president’s position throughout the campaign was that he would not raise income or payroll taxes on families making less than $250,000, and that’s a promise he has kept,” said White House spokesman Reid H. Cherlin. “In this case, he supported a public health measure that will extend health coverage to 4 million children who are currently uninsured.”

In some instances during the campaign, Obama was plainly talking about income, payroll and investment taxes, even if he did not say so.

Other times, his point appeared to be that heavier taxation of any sort on average Americans is the wrong prescription in tough times.

“Listen now,” he said in his widely watched nomination acceptance speech, “I will cut taxes—cut taxes—for 95 percent of all working families, because, in an economy like this, the last thing we should do is raise taxes on the middle class.”

An unequivocal “any tax” pledge also was heard in the vice presidential debate, another prominent forum.

“No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised,” Joe Biden said, “whether it’s their capital gains tax, their income tax, investment tax, any tax.”

The Democratic campaign used such statements to counter Republican assertions that Obama would raise taxes in a multitude of direct and indirect ways, recalled Kathleen Hall Jamieson, director of the Annenberg Public Policy Center at the University of Pennsylvania.

“I think a reasonable person would have concluded that Senator Obama had made a ‘no new taxes’ pledge to every couple or family making less than $250,000,” she said.

Jamieson noted GOP ads that claimed Obama would raise taxes on electricity and home heating oil. “They rebutted both with the $250,000 claim,” she said of the Obama campaign, “so they did extend the rebuttal beyond income and payroll.”

Government and private research has found that smoking rates are higher among people of low income.

A Gallup survey of 75,000 people last year fleshed out that conclusion. It found that 34 percent of respondents earning $6,000 to $12,000 were smokers, and the smoking rate consistently declined among people of higher income. Only 13 percent of people earning $90,000 or more were smokers.

Federal or state governments often turn for extra tax dollars to the one in five Americans who smoke, and many states already hit tobacco users this year. So did the tobacco companies, which raised the price on many brands by more than 70 cents a pack.

The latest increase in the federal tax is by far the largest since its introduction in 1951, when it was 8 cents a pack. It’s gone up six times since, each time by no more than a dime, until now.

Apart from the tax haul, public health advocates argue that squeezing smokers will help some to quit and persuade young people not to start.

But it was a debate the country didn’t have in a presidential campaign that swore off higher taxation.

Courtesy: http://www.breitbart.com

The Truth: Poor People Pay Today, We All Pay Tomorrow

Democrats have decided to pay for their proposal for a massive SCHIP expansion, which dilutes the focus on poor children, with tens of billions of dollars in additional tobacco taxes.

Short of finding at least 22.4 million new smokers (the number required to adequately fund SCHIP) Democrats will be forced to either kick millions of children off of health insurance or raise taxes on all of us by tens of billions of dollars.

It is irresponsible to fund a children’s health program, particularly one targeted at vulnerable children, with a declining revenue stream. We cannot treat our nation’s children like a house that we abandon when we can no longer afford to make payments.

Revenue to Fund Expansion Will Soon Disappear, Causing All of Us to Pay More:

• The Democrats are proposing a permanent tobacco tax increase to pay for a temporary SCHIP eligibility expansion.
• But here’s the problem…the percentage of Americans who smoke has been dropping for decades. And research and logic both show that raising the prices of cigarettes will lead to less smoking.

• According to an analysis by the Heritage Foundation, the Democrats would need to recruit 22.4 million new smokers by 2017 to keep funding their Medicaid and SCHIP expansion.

• At the same time the funding base will decline, SCHIP costs will increase exponentially. SCHIP costs increased 10 percent in 2007 and 18 percent in 2008. CBO predicts that SCHIP spending will more than double under the Democrat’s proposal. Couple that with a drop in revenue from decreased smoking and the gap between program spending and revenue becomes staggering—a gap Democrats will ask the American taxpayer to fill.

Democrats will Raise Taxes on Poor and Low Income Families:

• Tobacco taxes fall hardest on the working poor — the very people SCHIP was originally designed to help. According to the Campaign for Tobacco-Free Kids, 28.8 percent of adults who are below the poverty level smoke, compared to 20.3 percent of other adults.

• President Elect Obama promised that no one making less than $250,000 per year would see their taxes go up. This legislation breaks that promise.

• According to the Centers for Disease Control, other groups disproportionately likely to smoke include: adults with a GED (46%), Native Americans (32%), adults without a high school diploma (27%), all blacks (23%) including black men (28%), and young adults ages 18-24 (24%).

• In contrast, individuals with undergraduate degrees (only 10% of whom smoke) or graduate degrees (7%) would be far less likely to be affected. Given such data, it is hard to imagine a more regressive policy, disproportionately targeting such disadvantaged groups for higher taxes. Source: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5644a2.htm.

Democrats Add Tax Increases on Top of Tax Increases:

• An additional 61 cents per pack to finance SCHIP expansion may not sound like much, but it adds up. Under the Democrats’ proposal, a working class family with two adult smokers would face hundreds of dollars per year in additional federal tobacco taxes.

• That tax is in addition to state and local tobacco taxes, which are often hefty. These taxes are as high as $3.66 per pack in Chicago and $4.25 per pack in New York City. That adds up to thousands of dollars of government excise taxes per active smoker.

Is This Any Way to Stimulate the Economy?:

• The Majority has time and time again argued that we need to put more money in the hands of low-income families, presumably because they will spend it. With this bill they can spend their stimulus payments by paying more taxes.

• Speaker Pelosi suggested the recovery rebates would “help create 500,000 jobs” by the end of 2008. She suggested such relief was especially needed by “financially pressed Americans — putting money into the economy,” supported by the fact that “economists estimate that each dollar…leads to $1.26 in economic growth.” Americans might rightly wonder if dollars paid to financially pressed Americans are so stimulative, but wouldn’t tax hikes on these same financially pressed individuals — taking money out of their pockets — do exactly the opposite?

• Driving up spending in the form of higher taxes will only stimulate an expansion of government and contract the rest of the economy.

President Obama on Wednesday signed into law a bill (HR 2) that will reauthorize and expand SCHIP to an additional four million children, the AP/San Francisco Chronicle reports. Obama said that expanding the program is “the first step” to achieving universal health coverage in the U.S. (Freking/Elliot, AP/San Francisco Chronicle, 2/5). The House cleared the final version of the measure by a vote of 290-135 earlier in the day. Forty Republicans voted in favor of the bill, and 133 voted against it. Two House Democrats voted against the measure (Lengell, Washington Times, 2/5). The Senate approved the legislation last week.

SCHIP was set to expire on March 31 without congressional action. Under the bill, children in families with incomes of up to three times the federal poverty level will qualify for the program. New Jersey and New York state will be exempt from those income eligibility requirements and will be allowed to expand coverage to children in higher-income families (Kaiser Daily Health Policy Report, 2/4). The bill requires states to offer dental care through SCHIP, and allows them to extend dental benefits to children who have private coverage that does not include dental coverage (Pear, New York Times, 2/5). In addition, the measure generally requires states to provide equal coverage of mental and physical illnesses under SCHIP.

The bill also eliminates a five-year waiting period for documented immigrant children and pregnant women to become eligible for the program. The measure requires states to verify that SCHIP beneficiaries are documented immigrants or citizens, but it allows states to try to verify eligibility by matching an applicant’s name and Social Security number against federal records, rather than requiring documents proving citizenship (New York Times, 2/5).

The measure, which calls for increasing SCHIP spending by $32.8 billion over four-and-a-half years, will be funded by a 62-cent-per-pack increase in the federal cigarette tax. The bill will provide coverage for the additional four million children by 2013, while continuing coverage for seven million children already in the program (AP/San Francisco Chronicle, 2/5).

Courtesy Of: http://www.medicalnewstoday.com Article Date: 06 Feb 2009 - 5:00 PST

Smokers around the country expected cigarette prices to rise on April 1st, when the new federal taxes to fund the S-CHIP program start getting assessed.  They got a rude shock this week, when tobacco companies decided to hike prices ahead of time to stop consumers from hoarding in the last week of the month.  It may not be the last time, either, as states around the country look for revenue from so-called “sin taxes”.

Smokers who were preparing to take a hit to their wallets next month are learning to their surprise that the era of nearly $5-per-pack cigarettes arrived early. On April 1, the federal government boosts its tax on cigarettes to help pay for a children’s health care program. But many tobacco companies, in anticipation of the extra 62-cent tax, decided to implement price hikes now — about three weeks early. Tobacco giant Philip Morris, maker of popular brands Marlboro, Virginia Slims and Parliament, upped its list price 71 cents per pack on Monday. R.J. Reynolds, maker of Kool, Camel and several discount brands, plans to raise prices between 41 and 78 cents beginning Monday. This, in turn, has driven the retail price of most packs of cigarettes up about $1 at many local stores. The cigarette tax is a great example of Big Government hypocrisy on Big Tobacco.  They claim to want to penalize smokers for the health-care costs they create through their nicotine addiction, but the funds will go primarily to health-care costs to non-smokers: children.  In reality, they needed a big new revenue stream to pay for another giveaway, and decided to get it from smokers. Nor is that the only hypocrisy.  Most nanny-staters claim that they’re acting in benefit of smokers by increasing taxes, as that will provide further incentive for them to quit using the product.  However, if people actually did stop smoking, it would bankrupt government, which needs a large smoking tax base to provide billions in cash on state and federal levels.  If we propose the reverse — if we outlawed tobacco rather than taxed it — would Congress eliminate S-CHIP?  Of course not.  They’d just look for something else to tax.

Michael Flynn wrote about the same issue at Reason a month ago.

Desperate for an infusion of cash, politicians have turned to their oldest stand-by; cigarette taxes. Even after decades of steady increases in tobacco taxes, state lawmakers in at least a dozen states are looking to raise cigarette taxes. Right now, government makes more off the sale of a pack of cigarettes than tobacco companies. In some states, two-thirds of the price of a pack already goes to government. This will get worse because Congress just hiked the federal cigarette tax 61 cents a pack to help pay for the expanded State Children’s Health Insurance Program. Anti-drug advertisements by government agencies like to tell the public that those who buy illegal drugs fund gang warfare and street violence.  In a real way, those who smoke cigarettes fund Big Government.  Maybe we should have an advertisement for that to play on television; the Libertarian Party could use it for recruitment. The same nanny-staters that usually also push for progressive tax policies, like the Obama insistence that he will only increase taxes for the top 5% of earners, ignore the very regressive effects of cigarette tax increases.

The overwhelming majority of cigarette taxes are paid by low-income households. In a recession, you’d think lawmakers would want to give these folks a break. But, lawmakers’ habits are hard to break even when it is clear that tax increases don’t raise any new revenue. Cigarette taxes are also models of foolish static tax analyses, promising more revenue than they deliver, for this very reason.

In 2006, New Jersey raised its already high cigarette tax, thinking it would bring in an extra $30 million a year. It didn’t. Worse, it caused their actual collections to drop by more than $20 million. The tax increase threw the state’s budget off by $50 million, money that had to be made up by other taxpayers. This isn’t unique to the Garden State. Since 2003, there have been 57 cigarette tax increases across the country. In 37 (68 percent) of those cases revenues failed to meet projections. Why?  Higher taxes depress sales.  In static analysis, no one accounts for the depressive effect of tax increases, which routinely means that tax increase revenue projections fail to match reality.  When the squeeze disproportionately hits people who have less disposable income, the greater the difference will be. But planners have learned this lesson, right?  No.  Individual states have already begun planning cigarette tax increases in Illinois and in Florida, where a Republican has sponsored the increase.  That will lead legislatures to allocate spending based on the inflated projections of static analyses.  And when those revenues fall short — as they will with the S-CHIP tax as well — government won’t stop spending the money.  They’ll just look for more ways to take out of the taxpayers’ hides.

Courtesy www.hotair.com