Diminishing Returns, No Ifs, Ands or Butts

By November 8, 2007Health Care, Taxation

Monday in Sacramento:

The Democratic leader of the state Assembly announced a final effort Monday to pass a health care overhaul before the end of the year, proposing a $2-a-pack tax on cigarettes to help expand coverage to all 6.8 million uninsured Californians.

Tuesday in Oregon:

Smokers in Oregon are breathing easier after voters defeated a cigarette tax increase to pay for children’s health care in Tuesday’s special election.

With 54 percent of the expected vote counted, Measure 50, proposing an 84.5 cent tax increase per pack, was rejected by 60 percent of the state’s voters. Among Oregon’s 36 counties, the cigarette tax intended to extend health insurance to more than 100,000 uninsured children through a new “Healthy Kids” program was passing only in Multnomah County.

In Washington, from the Heritage Foundation, on the latest House-passed SCHIP reform:

The bill depends on 10 years of tobacco revenue to pay for a 5-year bill. Therefore, in 2012, either millions of kids will be forced off SCHIP or Congress will have to inject an estimated $59.3 billion in new spending to maintain enrollment. Moreover, not only does a tobacco tax disproportionately target low-income families, but Heritage Foundation analysts estimate that 22 million new smokers would be needed to fund the proposal.

And in Washington, D.C.:

According to Leavitt, President Bush will veto the latest version of SCHIP legislation, as well as any version of the measure that includes a tobacco tax increase. “The president has been very clear that he does not intend, is not willing, to raise taxes and doesn’t think it’s necessary,” Leavitt said (Johnson, CongressDaily, 11/6).

Policymakers who propose tobacco taxes as a way to fund a defacto entitlement program are pandering, unserious, or fully intend to replace those revenues with another tax in the future.

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