Wednesday, April 01, 2009

Cigarette Tax

Typical nonsense here concerning the increased cigarette tax. Let's go over the Principles-level basics...

1) Not liking something is not a reason to tax it, not in the economic sense anyway. Though it just struck me that it might be a good example of the divide between political costs and economic costs. Perhaps we should tax the "hot, juicy steak" smoke since I don't like the feeling of hunger it encourages?

2) Some people say that taxing cigarettes is good since people "have to have them," i.e., the demand for them is inelastic. Fair enough; low deadweight loss in taxation is a reasonable goal, and Ramsey would be proud. Then people come around and say it's good to tax them because it will significantly reduce their consumption, and that's a good thing since cigarettes are little white evil sticks. I want these people to argue with each other. Sometimes it's the same people saying both things.

3) Saying that taxing smokers makes fiscal sense since "it hits us in our pocketbooks eventually" (via public health care) is a misplaced argument; that's a problem with the public provision of health, not the smoking of cigarettes.

Let it also be said that I've never smoked a cigarette in my life, don't anticipate doing so and hope that I don't, yet cigarette taxation, and its increasing excess, is an embarassment.

I'm also curious if a study has been done to compare, in a cost/benefit framework, the costs of increased public medical burden due to smoking, but in light of the increased benefits of early death to the Social Security system.

9 comments:

Dana said...

Let's not even get started on alcohol taxes. A $28 dollar bottle of vodka should not have a $4 additional tax.

dana

al said...

Pay the tax!
Don't complain!
Redirect the funds to afford the tax from your Charity donations to your local Church, Red Cross, any other organizations pressing for this.
REMEMBER - Charity starts at home.

al

Jason O said...

Smoke' em if you've to'em

Frank said...

Matt--for cost/benefit work see a JAMA paper by Manning et al--it's now about 20 years old but finds Soc Sec "savings" from premature death offsets higher medical costs.

For more recent work, you might find something by Kip Viscusi.

Anonymous said...

"Not liking something is not a reason to tax it, not in the economic sense anyway."

It's not? Are you therefore claiming that negative externalities do not exist? Or are you claiming that Pigouvian taxes cannot solve them?

Anonymous said...

I think the tax on alcohol should be raised extensivley since it is a major killer on our highways.I would rather ride with a smoker than a drunk any day.

Anonymous said...

When is our communistic government going to start taxing the air we breath!Hell, they tax everything else! Tax,Tax,Tax, its all you here about anymore!

Anonymous said...

FREE THE WEED!!!!!!!!!

Anonymous said...

People are going to start buying cigs off the black market which will be cheaper to buy before the tax increase so I say raise the tax as high as you want.Its not going to affect me in the least!! HA HA !!