Tobacco Tax Fallacy - USM Forum -- Message Board

Date: Jan 20, 2006

Tobacco Tax Fallacy

Date: Jan 20, 2006

I think the idea is to get the tax now before everybody quits or dies, which is a type of quitting.

Date: Jan 20, 2006

Southern Justice wrote:

Mississippi is currently: 1. Spending millions upon millions of dollars of tobacco settlement money to stop smoking among Mississippians. 2. Considering increasing the tax on cigarettes to help fund education. Now, suppose #1 works and fewer people smoke in the future. That means that education funding will drop. Assume the number of smokers goes to zero. All else equal, that means $0 in tobacco tax for education. Now, suppose smoking doesn't decline. Education funding will be on an increase, but the money from the tobacco settlement will have been wasted for the most part. Millions wasted. I understand there are other factors in play here, such as insurance costs and other social benefits. I still don't think this makes much sense. Am I the only one who sees the conflict here?

After years of education we are still 10th highest in the nation for smokers, 24% of adults vs less than 20 for the nation, reflects in Health rankings. Dropping to national average for smoking would reduce health care obligations of the state beyond what is currently earned from taxing food.

State health rankings and scores

State
2003 rank
2003 score
2002 rank
2002 score
2001 rank
2001 scoreMS 50 -22 49 -22.2 49 19.1

Date: Jan 20, 2006

Dropping to the national average would reduce health care costs. Beyond the amount of $ raised by taxing food? I'm not sure. What reducing smoking will do is lower the number of packs of cigarettes sold, which will lower the total tax revenue on cigarette sales, which will lower education funding, given that education funding will be tied to the $1/pack cigarette tax increase.

Date: Jan 21, 2006

So Mississippi's caught in a kind of catch-22 here: we either pass a tobacco tax that will cripple education funding or we leave the cigarette tax among the lowest in the nation, reap the fiscal benefits and encourage a high rate of lung cancer, heart disease, emphysema and other smoking related illnesses.

Seriously, though, I heard a couple of guys from the CDC on NPR the other day arguing that the amount of damage done by smoking's not only vast but hurts in surprising ways. Companies seeking to insure their workers, for instacne, have to pay higher premiums if their work force has a certain precentage of smokers. Higher premiums cut into the companies' bottom line and usually leads to higher co-pays for the employees, cutting income and sales taxes from wages. Similarly, smokers become ill more often, thus, missing work and cutting productivity. And as you might suspect, many smokers come from the uninsured or underinsured segment of the population that doesn't seek medical attention until the situation is grave, and then goes to the emergency room as a ward of the state (Medicaid), hitting us in the tax rolls. (There's something like 40 million people in the USA who have no health insurance.)

The long term benefits of the increased cigarette tax, then, will be considerable, if it successfully discourages smoking. The catch is that those benefits won't show up for awhile . But . . . there's another way of weighing this problem: isn't it like immoral to not do everything in our power to lessen the pain and suffering that results from tobacco addiction?

Date: Jan 21, 2006

Yossarian wrote:

pass a tobacco tax that will cripple education funding

Doesn't that assume a reliance on a tobacco tax foundation rather than considering the tobacco tax a supplemental, and impermanent, boost to current funding?

Date: Jan 21, 2006

Found funds wrote:

Yossarian wrote:
pass a tobacco tax that will cripple education funding
Doesn't that assume a reliance on a tobacco tax foundation rather than considering the tobacco tax a supplemental, and impermanent, boost to current funding?

If you're going to cut sales taxes and replace them with tobacco taxes, then we've got a problem. That's what is being proposed.

Date: Jan 21, 2006

Southern Justice wrote:

If you're going to cut sales taxes and replace them with tobacco taxes, then we've got a problem. .

The best predictor of tobacco or drug use is "availability." Raising the taxes on tobacco would decrease its availability.

Date: Jan 22, 2006

Cough wrote:

Southern Justice wrote:
If you're going to cut sales taxes and replace them with tobacco taxes, then we've got a problem. .
The best predictor of tobacco or drug use is "availability." Raising the taxes on tobacco would decrease its availability.

These 'simple' answers really answer nothing!

The hope is that when tax rates are increased on tobacco, consumption will decline. AT THE SAME TIME, Mississippi is proposing to use the increased tobacco tax to supplement lowering sales tax rates on food, etc. So tax revenue from sales tax falls but tax revenue from tobacco rises to offset. What happens when smoking declines, tobacco tax revenues decline, and our funding is tied strongly to tobacco taxes? Tax revenues fall and funding falls! Then we have to re-raise ordinary taxes to get our revenues back to an acceptable level.

No one has yet to post a real answer as to why the legislature would tie our revenues to an activity that the state is simultaneously trying to end? This makes no sense!!!!

Date: Jan 22, 2006

Southern Justice wrote:

These 'simple' answers really answer nothing!

I wasn't trying to explain anything. I was only stating what research has shown: the best predictor of tobacco and drug use is availability. You are probably correct when you say that if tobacco use is reduced in Mississippi the state would receive fewer tax dollars from that source. But think how much the Mississippi taxpayer would save on medical care!!!

Cough, Cough, Hack, Hack.

Date: Jan 22, 2006

health care savings wouldn't be an issue if mississippi like the other states hadn't caved to socialized healthcare. if there were no free rides we wouldn't be in this mess.

Date: Jan 22, 2006

Don't Tread On Me wrote:

health care savings wouldn't be an issue if mississippi like the other states hadn't caved to socialized healthcare. if there were no free rides we wouldn't be in this mess.

Which begs three different questions: 1) everyone gets paid a living wage; 2) health care is affordable, and 3) pharmaceutical companies aren't making themselves rich at our expense.

Date: Jan 22, 2006

Don't Tread On Me wrote:

health care savings wouldn't be an issue if mississippi like the other states hadn't caved to socialized healthcare.

If there were no free rides we wouldn't be in this mess.

Caved into socialized healthcare? Quite the opposite is true. The new Medicare prescription plan is a first step toward privitization of health care benefits.

You say if there were no free rides we wouldn't be in this mess. What would you to with Mississippi's disadvantaged, handicapped, and poor? Let them sit on the hospital steps?

Date: Jan 22, 2006

Reality Check wrote:

Which begs three different questions: 1) everyone gets paid a living wage; 2) health care is affordable, and 3) pharmaceutical companies aren't making themselves rich at our expense.

none of those are questions.

how do you intend to provide a living wage? by requiring employers to pay higher wages? why not just raise prices of goods and services directly? it won't work because that will defeat the purpose of increasing wages in the first place.

the way out of this is by individuals deciding to gather wealth instead of spending it frivolously. this applies to mental wealth and potential as well as financial wealth.

how do you define affordable? affordable for whom? affordable before or after you pay for the high-dollar house you can't afford and the tricked out car you are paying for over 72 months?

since something like 499 out of 500 drugs developed don't work, companies have to make their money on the one that does make it. what do you want? companies to stop research and development on drugs? if you legislate profit margins, you'll get less progress in drugs for cancer, AIDS, childhood diseases, arthritis, and other chronic afflictions.

"let's just pay everyone more money! more money for citizens and less money for corporations has got to make us better off, right?" wrong.

Date: Jan 22, 2006

Bushed wrote:

Don't Tread On Me wrote:

health care savings wouldn't be an issue if mississippi like the other states hadn't caved to socialized healthcare.
If there were no free rides we wouldn't be in this mess.

Caved into socialized healthcare? Quite the opposite is true. The new Medicare prescription plan is a first step toward privitization of health care benefits.
You say if there were no free rides we wouldn't be in this mess. What would you to with Mississippi's disadvantaged, handicapped, and poor? Let them sit on the hospital steps?

yes, and it will take years of privitization to undo the problems caused by the great liberal socialist regimes. great society, my a$$.

to answer your second question, individuals abandon their parents, grandparents, children, and grandchildren and then expect the state to provide care. they make poor decisions and wait for the state to clean it up. the answer is individual and community responsibility, not socialized healthcare.

Date: Jan 22, 2006

I fear this thread has now degenerated into a liberal v. conservative circularity.

Date: Jan 22, 2006

Southern Justice wrote:

I fear this thread has now degenerated into a liberal v. conservative circularity.

I fear you may be right (I mean correct).

Date: Jan 22, 2006

Well, let me wade in. I've been pretty outspoken as a conservative, a moderate one by my own lights. However, we have to face the fact that many healthcare and other needs simply cannot be met by private individuals. I'll give my own example: my dad had a massive stroke at 44 and lived to be 75. For 25 of those 31 years, my mom kept him at home, at tremendous sacrifice of her own quality of life and her own health. He received Social Security and Medicare, and got healthcare and Rx from the VA. Without VA, he would have to have been on Medicaid as his meds and therapy were far beyond their means.
In the last few years of his life he was in a nursing home, because my mom was not physically able to care for him any longer. At that point he was off VA and on Medicaid. We tried the home health option first, and it was just unworkable and the NH was the only solution, and a heart-wrenching one at that.
We looked at whether family resources could cover a nursing home -- ha! Unless you have millions, forget that. When the previous poster talks about families caring for their own, does he have any idea what it costs per day for a nursing home?
Did we "abandon" my Dad, expecting the government to do our job? Or were we like countless other families who do their best and find themselves in these situations anyway?
Before you go blaming and accusing, Don't Tread, you need a little more information.

Date: Jan 22, 2006

Reality Check wrote:

Which begs three different questions: 1) everyone gets paid a living wage; 2) health care is affordable, and 3) pharmaceutical companies aren't making themselves rich at our expense.

To which Don't Tread On Me began his/her reply with:

none of those are questions.

Actually, I was referring to "begging the question," the logical fallacy that assumes as a premise that which must be proven. Thus, the three items I listed were premises that needed to be proven.

Date: Jan 22, 2006

LVN wrote:

Well, let me wade in. I've been pretty outspoken as a conservative, a moderate one by my own lights. However, we have to face the fact that many healthcare and other needs simply cannot be met by private individuals. I'll give my own example: my dad had a massive stroke at 44 and lived to be 75. For 25 of those 31 years, my mom kept him at home, at tremendous sacrifice of her own quality of life and her own health. He received Social Security and Medicare, and got healthcare and Rx from the VA. Without VA, he would have to have been on Medicaid as his meds and therapy were far beyond their means.
In the last few years of his life he was in a nursing home, because my mom was not physically able to care for him any longer. At that point he was off VA and on Medicaid. We tried the home health option first, and it was just unworkable and the NH was the only solution, and a heart-wrenching one at that.
We looked at whether family resources could cover a nursing home -- ha! Unless you have millions, forget that. When the previous poster talks about families caring for their own, does he have any idea what it costs per day for a nursing home?
Did we "abandon" my Dad, expecting the government to do our job? Or were we like countless other families who do their best and find themselves in these situations anyway?
Before you go blaming and accusing, Don't Tread, you need a little more information.

no, I think I've got plenty of information. your downfall is that you let your personal experience dictate your assessment of things.

for every story like yours i bet i could find two that fit my scenario if given access to proper data to verify.

this is a common shortcoming around here. "this is what happened to me so it's the way it is" says the average poster. posts that are based only on personal experience might as well just be rumor since there's no scientific link between a sample of 1 or 2 or 3 or 10 and the population as a whole unless the population is 1 or 2 or 3 or 10, in which case the issue is moot from a utilitarian point of view.

Date: Jan 22, 2006

You have a very cold approach. I'm giving an EXAMPLE, not generalizing from a specific.
However, you missed the point, which is that regular people cannot meet these situations without some kind of help. My experience is more common than not.
I'm guessing, by the way, that you are a student.

Date: Jan 22, 2006

you're correct in that my approach is cold. logic and reason are cold, and that's what makes governing difficult. leaders have to make decisions that are best for the most people. there is no solution that is best for everyone.

where would the money come from? person a gets money or assistance for his or her family's need from the gov't. where does it come from? person b, person c, and person d. when persona b, c, and d need help, who has to pitch in? person a!

what if person d is wealthy enough to pay for care for his relative? then person d pays for his relative and pitches in for persons a, b, and c. that sounds equitable, doesn't it? it's ok to tell person d to pay for his own family needs and to help with others.

compassionate spending programs make everyone feel good for the moment until the moment passes and someone has to pay the bill. then we raise taxes, cut services, or both.

what did people do before fema? before food stamps? before aid to wic?

what's wrong with most of the governmental programs in the u.s. is just what's wrong with this proposed tobacco tax and with socialized medicine. they're not thought out well, and, more often than not, those who use them never pay their share. furthermore, they create conflicts of interest in which individuals rely on the government to prop them up.

if you doubt it, then take a look at social security and the number of individuals who saved nothing beyond ss for retirement.

Date: Jan 22, 2006

Ok, so what's your solution?

Date: Jan 22, 2006

how about some social darwinism? or just some plain darwinism? yes, it's a cold solution. it's also the way things were up until about 40 years ago.

Date: Jan 22, 2006

Well son, there's nothing more I can say to you. I hope you have lots of money saved for the day misfortune strikes you or your family. It's about $50,000 per year at Bedford Care and the like. Good luck.

Date: Jan 22, 2006

Don't Tread On Me wrote:

how about some social darwinism? or just some plain darwinism? yes, it's a cold solution. it's also the way things were up until about 40 years ago.

DTOM, if you are typical of what they call a "compasionate conservative," heaven help us.

Date: Jan 23, 2006

Don't Tread On Me wrote:

individuals abandon their parents, grandparents, children, and grandchildren and then expect the state to provide care.........the answer is individual and community responsibility, not socialized healthcare.

Don't Tread on Me: My guess is that you are a graduate of or a student at a state-supported college. Do you know what "state-supported" means? It means just that - STATE SUPPORTED. Do you think that you or your parents footed the entire bill for your education. BULL. The tuition you or your parents paid is only a small part of that it costs the state to provide you with a college degree. You don't want "socialized healthcare," but I'll bet you thrive on "socialized educationalcare." You should feel obligated to work for the state one full year for each full year the state has supported your higher educational pursuits. You, good buddy, are a product of "socialized educationalcare" whether you like it or not.

Date: Jan 23, 2006

Let's look at it like an investment.

Keep the food tax, increase cigarette tax and use the proceeds to bring Mississippi education into the 20th Century. The clearest indicator of smoking is education level, and the clearest indication of income is education level. So the cigarette tax would be an investment that as it drops off it is replaced by improved health care costs and augmented by higher taxes from an educated populace.

(PS - I did mean 20th, I wouldn't try to say 21st)

Date: Jan 23, 2006

Investor,

Thanks for helping get the thread back on topic.

What about the anti-smoking dollars that are working against the tax base? Should we rely on overall education to curb smoking, or should we continue to continue to spend millions on anti-smoking campaigns?

Date: Jan 23, 2006

Investor, although I wouldn't have made the "20th century" dig, I agree with you. When I asked my somewhat rhetorical question upthread, it was the point I was trying to make. Southern Justice, thank you for responding and making the link to the simultaneous grocery tax cut, which I had not considered in my post. Bad legislation can ruin a good concept.