No Easy Answer to the Cigarette Tax DebateThe week before last, we published post on the ethics of placing hefty taxes on cigarettes , an effort some states hope will help increase revenue for the state but also discourage smoking.
My argument in that post was that such a tax is unethical simply because smoking is an addiction, and as an addiction, no amount of taxes are likely to make people to quit. And I believe the states know this, which is why they're imposing these taxes. Smokers, by this reasoning, are being used as a cash cow.
But once the comments rolled in, new sides of the debate came to light. It's a far more complicated issue than one of the state versus its smokers. It involves who's determining how these tax dollars are spent, whether or not -- in lieu of these taxes -- smokers should have to pay for their own health care, and the complex relationship between taxes and health care overall. And while these taxes do turn smokers into a cash cow, imagine how much we'd save if hospitals weren't treating smoking-related illnesses.
Here's a fact: Some people live healthier lives than others. So should someone who eats well, runs five miles a day, and doesn't drink or smoke be exempt from paying the taxes that subsidize the medicare of those who live on fast food and smoke three packs a day? Put another way, should someone who doesn't drink soda have to pay for the treatment of type-2 diabetes?
What about those of us who don't drive? Should we be exempt from paying for our nation's interstates, bridges, and roads?
The basic question is whether or not the government should allocate taxes from each individual based on where that individual might need financial support. Viewed that way, it wouldn't take long for our system to become so labyrinthine -- even more than it is already -- that it would inevitably break down.
This isn't to say that our current system is the best, and it should remain. Quite the contrary. The problem is systemic, but more than one system is in play here. On one hand, we have the medicare system, one of the biggest issues facing young Americans as they contemplate an uncertain future. One the other, we have the problem of fairness and taxes -- i.e., not everyone benefits equally from the money they give the government. And of course, there's our general well-being. Cancer is on the rise, life expectancy is in decline, and obesity is more prevalent now than ever before.
Can taxes solve all this?
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To my knowledge, no one really believes that changes in tax laws can solve all our social problems. Indeed, the laws themselves are often quite flawed because they are the result of balancing tensions between sound economic policy and political considerations. Every economist in the world might agree that taxes on petroleum products are a good idea because they reduce demand for non-renewable pollution-causing global-warming resources. When gas prices are on the rise, however, it is not a surprise that politicians seeking favor in the electorate propose reducing or suspending them for a while.
Similiarly, economists might agree that congestion pricing on automobiles seeking to use the streets of midtown Manhattan should be charged a fee to do so. Politicians representing drivers most likely to pay the fees might veto such a proposal, even when the money raised could be dedicated to improve mass transit.
Often a new tax or similar cost requires a special sales job to get it enacted. Tolls used to pay for a new road (or maintenance on an existing one) are usually less objectionable to most drivers than an increase in the gas tax. In part, this may be because the drivers paying the toll feel the proceeds are being used to benefit them. Citizens may be more willing to pay social security taxes if they feel the money is kept in a "locked box" solely for use in paying social security benefits and not, say, used to fund an unpopular war.
Clearly tailoring every tax to a social issue and then requiring that the proceeds be used in very specific ways is impossible and maybe not even desirable. Having said that, if smokers would be more amenable to an increased cigarette tax if the additional funds raised were earmarked for teen education on the dangers associated with smoking and for treatment of patients with cardio-pulmonary disease, such a proposal could make sense as an appropriate balance between good policy and good politics.
There are differences when it comes to smoking as compared to the other things you mention such as drinking soda and diabetes. I can drink a soda and know that I am contributing to the possibility I may get diabetes. The fact of the matter it is my choice. I don't have a choice when I have to breath 2nd hand smoke from a smoker who could care less that I don't want to.
I would disagree that making cigarettes more expensive would not slow down peoples habits. That would be like saying that the cost of gas is not going to slow people down from going away this summer.