Thursday, January 15, 2009

Arguments for Cigarette Tax are Smoke and Mirrors

The House of Representatives passed an extension/expansion of the State Children’s Health Insurance Program (S-CHIP) yesterday by a vote of 289-139, and a similar bill will be marked-up by the Senate Finance Committee in the coming days. The bill, almost identical to legislation that was passed by Congress last year but vetoed by President Bush, will authorize $34.3 billion in spending on the program over the next five years. According to Congressional Quarterly:

It would allow states to cover children and families with income up to 300 percent of the poverty level. Democrats say it will permit enrollment of 4 million additional children and adults, expanding SCHIP to cover 11 million people.
This new spending will be funded by a 156% increase in the federal excise tax on cigarettes, along with a panoply of taxes on other tobacco products. Joe Henchman of the Tax Foundation criticizes the move in a new report:
Some opponents take issue with the mechanics of funding health care for children, and some with the idea of government involvement at all. Our criticism is much narrower: a politically popular and expensive program should never be funded by a small, low-income, politically unpopular minority like cigarette smokers.

There’s some great data in there, and it is definitely worth a read. But as for me, I’m just loving the irony in one of Obama’s first acts as President being increasing taxes.

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