But the Inky also had a front page story about cigarette taxes -- how New Jersey raised them and got less money -- it's the "paradox" that an increase in the tax on cigarettes often (make that "almost always") results in a decrease in revenue from the tax. Amazing, ain't it? These anti-smoking groups have been saying for years that if you raise taxes on cigs, people won't smoke as much; have those chickens come home to roost (and crapped all over New Jersey's budget crisis), ruining the happy, cautious dance of hypocritical 'sin tax' balanced against cynical greed?
Truth is, this is how it usually happens, and it happens for more reasons than people quitting. A quote from the story:
"When you're in a high-tax state, smokers, like anybody else, are price-sensitive, so they're going to go looking for cigarettes where they're cheaper," said Gregg Edwards, president of the Center for Policy Research of New Jersey. "There is a small number of folks who just wouldn't absorb the price increase and just decided to quit, but most of those folks just go to other places."Which neatly sums up why excessively high taxes like these are, essentially, a government stimulus plan for smugglers. When anti-whatever groups publish their neat little "taxes up, sale of [insert targetted "Bad Thing" here] down, yay!" policy studies and reports, they never mention that the most likely outcome is that the people are just buying the "bad thing" somewhere else. People cross the border to buy their cigarettes, or organized crime outfits bring truckloads of them from low-tax states like South Carolina. Are the benefits worth the crime, or the normalization of crime?
Michael LaFaive of the Mackinac Center for Public Policy recently studied the impact of cigarette taxes in Michigan, California and New Jersey... LaFaive's study estimated that 40 percent of cigarettes smoked in New Jersey come from out-of-state or illegal lines of distribution. The figure was based on smoking rates, the number of adults in the state, and the number of legal sales per adult.Bump the tax up enough, and you'll get hijacking and theft, too. We had a case near here a couple years ago where someone smashed a pickup truck through the glass front of a store at night, grabbed armloads of cigarette cartons, tossed them in the back of the truck, and drove off with thousands of dollars worth of cigarettes (and taxes). Great idea, those higher taxes.
Okay, pay-off time. You probably know -- and if you don't, you do now -- that I don't smoke. So cigarette tax increases are not a personal issue. But folks: replace "cigarette" with "beer" or "booze" and "smoke" with "drink," and you've got the same issue, same problem. Beer tax increases usually don't raise revenue. Revenue stays the same, or drops, and less beer is sold, which means less money is made by brewers, importers, wholesalers, and retailers, which means less revenue from that part of the chain, and jobs are usually lost, which means less tax revenue and more benefit payments. It's a brilliant cycle.
What's the solution? End excise taxes. Stop taxing targetted industries. If you don't think people should smoke, make it illegal (and good luck to you if it's just one state at a time). Don't try to balance the do-gooder "raise taxes so people stop smoking" with the darkly cynical "raise taxes and hope they don't stop smoking so much that we lose revenue." Do away with all these ridiculous taxes and fees and charges and nickel-dime bullshit. Tax income and property, things everyone has to pay (you can be progressive about it, I'm not touting a flat tax) and no one can avoid by smuggling their home into another state.
You'll have a more honest government, a government that isn't meddling in people's lives with tax policy voodoo. You won't be subsidizing crime: hijacking, theft, smuggling. And you won't look stupid when the inevitable happens.
I had totally misunderstood your tax stance in the past. I stand corrected.
I love this idea, but it would take more courageous politicians than those we have presently to raise taxes in the way you propose!
Really, JT? What did you think I was espousing before? I'm just curious!
The externalities of smoking far outweigh any of the revenues generated through taxation. If you want to really curb public expenditures especially on health care, have smokers pay increased/pro-rated health care insurance premiums. I mean they have to pay more for life/death insurance, why is it wrong for them to pay more for health care? Then there would not be this arguement about taxation. As far as I am concerned morbidly obese people should have to pay up as well.
I agree JP, although it gets nebulous factoring who is morbidly obese. Lots of football players using a bmi would come in as obese.
I'll take it a stretch further. for those of us with no kids why dont we pay a low rate for school taxes and those with more kids pay more? Also, make more roads toll. Those of us who walk or take public transportation to work and rarely drive (and therefore contribute a LOT less pollution) should not have to pay for folks and businesses who use and abuse the roads of the commonwealth. I dont care if my prices will go up a bit because "trucks have to bring in goods" at least I will have an option on whether or not I pay for those goods.
I agree that those who use and abuse the services should pay more. There are a lot of business owners getting rich trucking on our roads that cost a fortune to upkeep and build.
I believe sierra nevada ships their beer on rail. That's cool.
I don't disagree with the sin taxes. However, I do agree with your analysis that raising them almost never works. It's too easy for the politicians to do a calculation and see how much more money they will be bringing in but they assume sales will remain level at worst case. The government is telling us we need to stop drinking and quit smoking but then by raising the taxes they are telling us that they need our tax money to fix their spending crisis. Its a stop gap measure that almost never works.
We're headed into a warren of regulation and opinions (of doctors and engineers, which are really bad, because they're both sure that their 'opinions' are actually 'facts') here.
For instance...if you've got no kids, and I've got two kids but send both of them to private schools, shouldn't I pay the same as you? And if I drive instead of take transit, why am I paying for your transit subsidy? You want businesses to pay more for roads? But part of the government's reason for putting the roads in was to help grow trade. School taxes educate the general population, which benefits everyone, not just the parents and the kids.
See, this is why tax policy is SO DAMNED COMPLICATED. Because it's not just the taxing that's a bitch, and unfair, and personal, it's the spending. It's complicated because it's complicated.
That's what I like about excise taxes. They're simple; simply wrong. They're so clearly unfair, and it's an easy point to make.
And jp, I'm pretty sure smokers are already paying more for health insurance, aren't they? They've always asked me in the interviews if I were a smoker, so I'm assuming that; not so?
OK obesity is harder to define but it is not impossible. I think most people would know who we are talking abvout. 10 years ago the estimates of health care costs related to the combined effects of smoking and obesity where in the nieghborhood of $150bn per annum.
I understand the societal benefit of education, and that is why i am willing to pay for it. however, i dont believe I should pay as much as someone with six kids. And yes, I do think if you send your kids to private school then you should pay as much as someone with no kids. You pay for the transit subsidy because, like education, public transportation is a public good. You just dont pay as much as those who use it. In the long run we all benefit from less cars on the road and more public transportation.
No, I dont necessarily want businesses to pay more for roads... I want people who USE them to pay for roads. We are in a dire infrastructure crisis primarily because of trucks shipping goods through our state. Let those who use the services pay more.
I agree it's a complex issue, and the hornet's nest that arises from regulations, etc. I also agree about the reality of a black market developing for anything that is taxed too much.
Anyone who drives does pay higher taxes its called GAS tax...and that goes into roads and traffic signals like crosswalks to keep pedestrians safe. Using your analogy, pedestrians should have to pay taxes for crosswalks and pedestrian lights, as well as sidewalks...so maybe we should suggest a shoe/sock tax.
Lew's analysis on the school tax is right on...I don't like it when people say they shouldn't have to pay school tax because they don't have any kids...yet they benefit every day because the school system helps to make sure our general population is not stupid. Let's not take tax dollars away from a fragile school system that is already on the brink due to ballooning budgets and bad regulation/legislation.
You can argue this crap until you are blue in the face and in any case there is always someone who is getting the short end of the stick. I'm a big supporter of the FAIR tax.
All this makes me need a beer.
(Sorry lew resend.)2 things lew I understand the messy/complicated issues related to public goods and taxation and agree there is no perfect solution. However that is not thhe case with smoking. I cannot think of a more perfect correlation in science/finance than life expectancy/chronic illness and smoking. Actuarial science has built a trillion dollar life insurance industry on the mortality tables associated with smoking, this is not an unproven science. If you are one to look to the market for some direction, than the jury is in. It is a valid fact not opinion, that smokers suffer more chronic illness than non smokers and market for life insurance bears it out. As far as I know, smokers do not pay higher public health care premiums I know there is no smoking surcharge on Medicare taxes I have asked smokers at work and they do not pay higher premiums for health care that is not to say there are not health care insurance plans that do make you pay more but I do not know of any
This reminds me of the 1st states smoking ban earlier in the decade. Allot of revenue went over the border, & the restaurants on the small wonder side did take a hit. For the failing brew pub I worked at near the PA border, it was the coup de grace.
Not a lot of argument here, jp. In fact, if smokers aren't paying more for health insurance, that's ridiculous. I pay more because I'm fat, and I should.
Rich, you didnt read my post clearly. I didnt say those who dont have kids shouldnt pay, it's those with more kids should pay more, which is only reasonable and seems FAIR.
and I'd be happy to pay for crosswalks and pedestrian lights, provided i paid less for roads i didnt use. and last time i checked i already paid for the sidewalks outside of my house.
Funny how ornery people get when you suggest they pay more for services they use including including the "privilege" of driving, or extricate themselves from their car a bit more and live more reasonably closer to their work.
turnpike has been a toll road my entire life, lets make the rest of the highways the same. Or maybe you dont mind subsidizing the trash trucks coming from NJ and NY and all the other trucks blasting thru our state ripping up the highway.
People with more kids paying more for school taxes only seems reasonable and fair if you're looking at school as a service to the parents. What's the service? Child care? Or educating the kid? If it's educating the kid, as in, the state's paying for it, so ante up, then why should I be paying more when I send the kids to private school? Your internal logic doesn't check.
As for people getting ornery when they have to pay more...duh. You'd expect them to get ornery when they have to pay less?
your not that fat lew, plus any extra 'carriage' you might acquire is small price to pay for the work that you do.
Lew, I reread my post and realize in my haste my statement was not as lucid as it should have been. I wrote:
"And yes, I do think if you send your kids to private school then you should pay as much as someone with no kids."
What I was saying was if you send your kids to private school then you should pay as if you have 0 kids. In other words, you SHOULDNT be paying more to send your kids to private school.
Sorry for the lack of clarity. This has been a good discourse on a subject-- public policy-- that has very few clear right answers and a lot of opinions/variables, making it a compromise and (essentially) an unsolvable problem, or more of an art than a science.
On another note, I'm surprised we haven't had any long gone PA brewers weigh in from the afterlife. I guess these mortal topics dont interest them as much as beer.
Jp's not that fat either, even WITH the turkey devonshires and Iron's he'll be consuming this weekend.
Wow. Good stuff here. I have to say that the best argument I've ever heard against excise taxes goes like this: instead of taxing booze or cigarettes, why don't we tax something like mustard? Think about it, almost everyone buys mustard at some point, especially around the mid-summer holidays. It would increase the state's revenue without offending much of anyone -- I, for example, wouldn't notice an extra 5% in the mustard column in my monthly budget. As far as I know, there aren't any mustard addicts we'd be exploiting, and I'd venture a guess that more people per capita consume mustard than smoke cigarettes. The burden of the tax is spread equally among the people, and...
Oh wait... you don't think mustard should be taxed because there's no reason that the people who consume mustard should pay more for their condiments than people who buy mustard or relish -- or who prefer their dogs au natural? You think taxing something like mustard is silly, because really what has mustard ever done to you? And what does it matter if the taxation of mustard would fund a potentially successful effort to instill world peace in every corner of the globe? Get the public to part with their money on the merit of that program alone, not under the guise of a mysterious and arbitrary excise tax.
gpk, that is because those ber barrons were never axed like us distillers of fine pennsylvania grains. Between the drys and the revenuers we were hounded out of the commonwealth. Why do you you think I had to close down my fine distillery in Freeport Pa? Blast you Gov Pennypacker!
@Lew Bryson: Well, you sometimes have the tone of a tax revolt Republican, and you've lamented a lack of Blue Dog Democrats, so I was putting two and two together.
I'm all for progressive taxing for the general welfare! I think government only fails when it doesn't provide clear, tangible goods in return for those taxes, e.g. bailing out the banks, but not expecting a return on that investment.
Oh. Well, in that case, you didn't totally misunderstand me. I don't like a lot of government programs, and it pisses me off to have to pay for them. On the other hand, if the programs are there, I'd like to see them paid for instead of borrowed for, and I'd like them paid for fairly. Taxes suck, in short, but unfair taxes really suck.
Laffer would be proud that his curve has further proof.
I tried to give a shout out to my sponsors but they edited me. Video here
Just throwing this out there regarding education and property taxes and such. I've read a few comments here for reducing taxes for those without kids, and I understand the logic, but I will also say this: If you received a public education, you, no doubt, benefitted from it. I won't get a soapbax in that regard, but I will get on one in this regard: If you have never been inside an inner-city public school, i.e.- real-inner-city Philly, Baltimore, NYC, these places are where dreams are not made and minds are not cultivated. Rarely, but occasionally, children escape inspite of the circumstances, not because of anything positive. In areas like that where the amout spent per pupil is not in direct proportion to other less populated areas, most kids in public education truly have no chance. My point is this: If we allow every area to go underfunded and not chip in our part, we will be the last generation enjoying things like Philly Beer Week, or online blogs about things that matter, because, we will have an emtire generation of uneducation children set to take the reigns. Not pretty. And I know, because I have been there and have seen it first hand.
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