Sunday, July 22, 2007

Enough with the Sin Taxes!

In a New York Times editorial that is critical of Bush's pledge to veto a renewal and expansion of the S-CHIP program, we read: (excerpts, emp add)
... the Senate bill would provide coverage for an additional 3.2 million children who are uninsured now. And in another boon for American health, the costs would be paid for by a steep increase in taxes on cigarettes and other tobacco products — a further disincentive for smokers.

If more revenue sources are needed, the House should consider a new tax on alcohol, which would also have health benefits ...
Tax people based on their income or wealth. In other words, their ability to pay. Or if we are going to tax activities in order to promote health, start with skis. That'll end broken bones. After that, tax Krispy Kreme donuts. To cut down on obesity and diabetes. Next, fried chicken. Lower the nation's cholesterol. Etc.

This going after smokers has gotten way out of control. Smokers pay taxes that cover their health costs. Find another pariah group.


By and large, pigovian taxes, like those upon tobacco and alcohol, are regressive, meaning they hurt poor people more than rich people as the charge represents a larger fraction of their money. However, I contend that tobacco use itself is an externality tax foisted upon our nation by an industry without redeeming social benefits.

Unfortunately, due to the addictiveness of tobacco use, I doubt the taxes have the intended disincentive and should be limited to offsetting the externalities associated with consumption

I say, reinvigorate progressive taxation. The wealthy benefit much more from tax financed infrastructure and concentrate wealth across generations due to unearned wealth. Those who start out endowed by their forbears have many mathematical advantages over the working poor and as such can tolerate the vagaries of the market. This inherent imbalance is most effectively addressed via a progressive inheritance tax. Everyone, including the wealthy, should pay their fair share especially after they are done with it.

By Blogger Enterik, at 7/23/2007 4:21 AM  

Enterik wrote, Unfortunately, due to the addictiveness of tobacco use, I doubt the taxes have the intended disincentive

Maybe it's not actually empirically true, but I thought there is a disincentive effect, but not at the margin. Rather, the effect is to prevent people from getting addicted in the first place as teenagers.

By Anonymous Anonymous, at 7/24/2007 12:55 AM  

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