The True Sin of Sin Taxes
The ironic truth hidden behind sin taxes is a particularly ugly one.
April 15, 2014 - 11:46 pm
The progressive Left’s impulse toward adventurism in utopian social engineering via government fiat has a long and glorious history in the United States. It is also, unfortunately, one of the most reliable tools traditionally employed by government at large – which rarely has any use for either liberal or conservative dogma – to achieve their chief ambition; the fattening of their coffers with more tax dollars. And you would be hard pressed to find a more systemic example of the intersection of these two worlds than the subject of sin taxes, particularly when it comes to the legal sale of tobacco and alcohol products.
On the surface, this unholy union sounds like a best of both possible worlds solution for all societal ailments. Those with a vested interest in seeing a nanny state control the “unacceptable” practices of boorish lowbrows who refuse to toe the party line dictated from the corner of Haight and Ashbury believe that a drastically increased tax on tobacco will stop people from smoking. Their compatriots who claim an interest in the nation’s economic welfare proclaim that fewer smokers will result in less sick people, thereby reducing strain on the health care system. Meanwhile, government agents applaud wildly, proclaiming their immense admiration for the laudable goal of allowing them to tax a product at roughly 800% of its actual value in the interest of accomplishing whatever the heck it is that you people are jabbering about.
So, as all the cool kids on The Twitter are wont to say these days, what could possibly go wrong? Let’s address the above points a bit out of order.
Do higher sin taxes on cigarettes actually result in some vast new influx of government revenue? Recent history would dictate otherwise. In Chicago, Cook County residents are paying tobacco taxes of nearly five dollars a pack, second only to New York City. This brilliant scheme, enacted over the last few years, was supposed to not only reduce the rate of consumption by smokers, but solve a myriad of budget problems facing the Windy City with all of that hot new tax cash. But after a lengthy period of study, not only were smoking rates not going down significantly, tax revenue was falling many orders of magnitude short of projections. The reason? People were smuggling tobacco into the state at an alarming rate.
Taxes in nearby Indiana were less than a dollar per pack, and in neighboring Missouri they are only seventeen cents. The results were easily predictable without needing to call in a crack team of anthropologist and economists. Business (and cash) was leaving the state and the police were busy pulling over cars with too many Pall Malls in them or searching neighborhood convenience stores for illicit product.