MaggieMae
Reality bits
- Apr 3, 2009
- 24,043
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Economists doubt that sin taxes greatly affect the behavior of most Americans, especially when the amounts tacked on are quite small (as they usually are). Demand for things like cigarettes and soda is relatively inelastic. That means modest increases in price dont greatly influence most peoples behavior. In other words, a penny-per-ounce soda tax, which has been proposed in New York, is unlikely to deter people from supersizing their Sprites.
Old habits, especially bad ones, die hard.
This underscores why the real value of sin taxes is their ability to generate cash. After all, taxes that truly succeeded in changing behavior would be self-defeating. If a cigarette tax forced all puffers to quit, there would be severe withdrawal symptoms not only for smokers but for states that relied on the tax for revenue.
On some level, politicians want these taxes to affect behavior, said Kim Rueben, a senior fellow at the Urban Institute who studies state and local taxes. But theyre kind of in trouble if it works too well. If its actually effective in changing behavior, governments lose that revenue source and have to figure out what else they can start taxing.
http://www.nytimes.com/2010/04/18/weekinreview/18rampell.html
Yep. So once again we have to ask whether or not the goal is to reduce skin cancer, or pay for the healthcare bill. They cannot have it both ways. Sheez.
Why can't they? By reducing the risk of skin cancer, you ultimatley reduce the cost of health insurance and healthcare for said skin cancer. Federally funded healthcare would not cost as much, requiring less of an influx of revenue from policy holders and tax payers. Agreed?
While I disagree with Chanel's article on puffers who continue to smoke, the statistics proving otherwise, I do agree that once the windfall from the tobacco company lawsuits is depleted, several states are going to have to come up with other forms of revenue to replace it (my own included). But as far as the tax itself on cigarettes, it's like any other tax that may not be useful in the long term. Some politicians think that a huge tax on gasoline would force people to conserve and/or buy more fuel efficient cars. But what if everyone did? Just as if everyone quit smoking, the additional tax would soon become ineffective because they wouldn't be buying as much gas.