Health and Cigarette Taxes

The other thing about paying for health insurance with cigarette taxes is, of course, than in the case of a tobacco tax you're actually trying to move over time to the right hand side of the laffer curve, where your tobacco tax and other public health measures reduce smoking to a level where tax revenues decline. Health care expenditures, meanwhile, are more-or-less destined to go up over time. If you're going to earmark cigarette tax revenues for anything, it should be to fund some kind of anti-smoking efforts (Nicorette subsidies? hire people to enforce the rules against selling tobacco to under-18s?) or else just don't earmark the money.

Health care needs a sustainable revenue stream.

Comments

"The other thing about paying for health insurance with cigarette taxes is, of course, than in the case of a tobacco tax you're actually trying to move over time to the right hand side of the laffer curve"

But, of course, given the Laffer Curve, if we reduce tobacco taxes enough, we'll decrease the number of smokers.

Don't believe me? Well, then, you must not understand the magic of the Laffer Curve.

Posted by Petey | July 14, 2007 11:17 AM

Does the Tobacco Laffer curve also loop way the hell up to get Norway? They must smoke like fuckin' chimneys there if so.

Posted by Glenn | July 14, 2007 11:23 AM

"Does the Tobacco Laffer curve also loop way the hell up to get Norway? They must smoke like fuckin' chimneys there if so."

According the Tobacco Laffer Curve, more than 140% of Norwegians smoke.

While so-called "surveys" disagree with this number, they obviously don't understand the magic of the Tobacco Laffer Curve.

Posted by Petey | July 14, 2007 11:33 AM

I disagree with the substance of Matt's post. I don't see anything wrong with using tobacco tax receipts for general health care finance. In the happy event that tobacco use declines, we can cross the bridge of finding replacement funding when we come to it. By that time, theoretically we'll have strangled the private health insurance companies and got people used to single payer (which, if other countries are any guide, will be FAR more popular than what we have now). No need to saddle ourselves with finding complete non-tobacco tax funding sources right at the start. It'll be hard enough to get the thing passed and started up without piling on more difficulties.

Posted by jimBOB | July 14, 2007 11:49 AM

What's truly amazing are those the Truth ads. They are funded, of course, by Philip Morris as part of a lawsuit payout. What is interesting, though, is that they are in effect a way to get tobacco advertising on TV, which has been banned for decades. Going by the notion that there truly is no such thing as bad publicity, some people surmise that this is actually a good thing for the cigarette companies; their product is back on TV for the first time in forever.

Posted by Freddie | July 14, 2007 11:55 AM

Shorter MY: Don't raise taxes on my cigarettes!

Posted by Algernon | July 14, 2007 12:16 PM

I've heard some of the discussions, and the increase in SCHIP is something the Senate Dems want, and under PayGo, they need to pay for it somehow.

Raising cigarette taxes is the most politically palatable way to pay for this.

Like Weber (?) said, politics and sausage making...

Posted by Dave | July 14, 2007 12:18 PM

There is a powerful moral reason to dedicate cigarette taxes (and also taxes on alcohol) for health care. The health care system will be taking care of smokers who later get cancer. With a high cigarette tax, the smokers themselves are essentially paying for the additional health care needed for smokers.

This would actually undermine the rationale for bans on smoking, but thats fine with me. Effectively a high cigarette tax dedicated to health care is in the smokers' own interest if they want to continue their habit.

Posted by Ed | July 14, 2007 12:48 PM

Another way to use tobacco to create better health care financing is to eliminate the tax, go back to subsidies and give everyone over a certain age (say 65) 1 free carton a week. The increased mortality rate alone should take care of the Medicare shortfall. Of course this will skew the Tobacco Laffer Curve.

Posted by Peter Driscoll | July 14, 2007 12:57 PM

I agree with Stoller and I have been saying the same thing. Hillary does not have an "Iraq problem" because she is where most people are on this issue.

Hillary was never a Lieberman. She didn't cheer on the war. She had all kinds of objections. Her position was that we ought to give inspectors more time, build a meaningful coalition and if all else fails go to war as a last resort. This was the position of most Americans. So it is not surprising that people are not upset with her over Iraq.

As we approach 2008 people are looking at who can get out us out of this mess responsibly. They are looking at experience. This is also why I am not writing off the GOP in 2008. If the GOP candidate can sell himself as the most qualified and experienced candidate to get us out responsibly he can win.

It is not enough to be antiwar. You have to convince the public that you can end the war responsibly. Vietnam was unpopular in 68 and 72 and yet Nixon won both elections.

Posted by DonB | July 14, 2007 1:32 PM

DonB, you're on the wrong thread

As to higher and higher cigarette taxes, let's not forget that the lower your income, the more you are likely to smoke. Raising taxes on tobacco has a very marginal effect on smoking, so don't kid yourself that you're going to be doing the poor a favor. Ask any smoker (or former smoker). But as far as dedicating tobacco taxes to health, that's OK. Funding free stop-smoking clinics would be one good use to put it to.

Posted by Traven | July 14, 2007 2:37 PM

I don't particularly care what Clinton says about her vote in 2002. She's just a slimy pol, so whatever she says will be bullshit anyway, and the result of some calculation about what will play best with the electorate.

I'm more interested in the years 2009-2013, and what I want to know is this: What will four years of a Hillary Clinton-directed foreign policy and national security policy look like, particularly in the Middle East, but in other important places as well?

What do people think? Personally, I don't like what I envision.

Posted by Dan Kervick | July 14, 2007 3:45 PM

I know no one reads comments this far down the list but I have an easy solution to stopping smoking in this country.

I am basing this idea on a statistic I heard a number of years ago: over 90% of smokers started before 18 or when they were in the army.

The army has made it a lot tougher to start smoking so I think most smokers start when it is ILLEGAL to smoke.

So institute a tax based on the percentage of underage smokers.

You could even promise to reduce taxes if the number of underage smokers drops below a certain level.

Of course, tobacco companies would still have to advertise to kids because they will die without addicting kids too young to know better. But it would make the tobacco companies PR a lot more difficult.

Posted by neil wilson | July 14, 2007 7:38 PM

If you're going to earmark cigarette tax revenues for anything, it should be to fund some kind of anti-smoking efforts

Cigarette taxes are an anti-smoking effort all by themselves, whatever you spend the tax revenues on. They discourage smoking by making cigarettes more expensive.

Health care expenditures, meanwhile, are more-or-less destined to go up over time.

Perhaps, but the reduction in health care costs attributable to a cigarette tax over time (cigarette tax = less smoking = less health problems) may exceed the decline in cigarette tax revenues from the reduction in cigarette sales attributable to the tax over the same period.

Tobacco causes 24 times as many premature deaths in America as inadequate health insurance. Doesn't this suggest that anti-smoking efforts are likely to be a far more cost-effective way of improving health and reducing premature death than improving health insurance? Health insurance pays mainly for services that try to fix people after they get sick. Anti-smoking efforts reduce their chances of getting sick in the first place. An ounce of prevention is worth a pound of cure.

Posted by Mixner | July 14, 2007 9:03 PM

Doesn't this suggest that anti-smoking efforts are likely to be a far more cost-effective way of improving health and reducing premature death than improving health insurance?

No. Thanks for playing 'whiny distracting non sequitur'. Is that a meme which is being passed around among wingers like herpes at Late Night Shots?

Health insurance pays mainly for services that try to fix people after they get sick.

Only in the stupid fucked-up American model. Which is why your argument is fallacious, since you're posing it as a choice between the status quo and providing wider access to the same fucked-up model. No thanks. But your disingenuous attempt to imply that proponents of reform aren't putting preventative care right up front is amusing.

Posted by pseudonymous in nc | July 15, 2007 12:22 AM

We decided some time ago to tax cigerettes heavily, it's just that we decided to do so in the tort courts, not in the legislatures. The basic deal was that the lawyers agreed to stop suing the cigarette companies if they would raise the price of the product and give the extra money to the lawyers. So lawyers got rich, and smokers (who in theory were the plaintiffs) wound up paying.

Posted by kafka | July 15, 2007 12:40 AM

pseudonymous, speaking of preventive care, have you had your blood pressure checked lately?

Posted by Dave | July 15, 2007 1:04 AM

I thought they were going to help pay for this by ending the ridiculous subsidy paid to expensive Medicare Advantage plans.

Posted by bob h | July 15, 2007 7:47 AM

Can we just take our foot off the throat of the poor for once? We've squeezed every last drop of blood from that turnip. Tax capital gains as income. There has never been any evidence that having a lower rate for capital gains does anything to spur investment. Although they rarely come out and say it, beneficiaries of the lower capital gains rate think that they'll just do a better job spending the money than would millions of regular people who'd probably spend it on something stupid like clothes for the kids or prescription drugs or something.

No, seriously. Cigarette taxes, alcohol taxes, state lotteries, legalizing gambling, increasing the fines for parking tickets... all regresssive, and governments have been ratcheting them up for decades. Enough. Just tax the rich already.

Posted by Dramatic Groundhog | July 15, 2007 9:21 AM

Cigarette taxes and alcohol txaes are indeed regressive but with one powerfully redeeming feature: anyone who doesn't want to pay them can easily not pay them. One need only refuse to purchase the products in question. That costs nothing, in fact it saves money! And spare me the whine about how addictive tobacco is. Millions of people have quiet smoking, including my father, my step-mother (both of them very long-term smokers), including even myself (granted I smoked for just two years as a teenager). It's totally doable.

Posted by Jonf | July 15, 2007 12:46 PM