Three Reasons Why Obama’s Cigarette Tax Hike Makes Sense

June 19, 2013 at 3:02 pm

President Obama’s proposal to raise the federal tobacco tax to pay for expanded early childhood education hasn’t gotten much attention but, as our new paper explains, it would cut the number of premature deaths due to smoking and raise an estimated $78 billion over ten years to improve access to high-quality pre-kindergarten programs.  No wonder the Washington Post’s Ezra Klein called it one of the best ideas in Obama’s fiscal year 2014 budget.

Here are three reasons why it deserves Congress’s support:

  1. Cigarette smoking is the leading cause of preventable disease in the United States. It accounts for about 443,000 deaths each year, or about 20 percent of all deaths — some 50,000 of them from secondhand smoke.
  2. Tobacco taxes are a proven strategy to reduce smoking, especially among younger people, and extend lives. As the graph shows, a 10 percent rise in cigarette prices will reduce smoking by 5-15 percent among people under age 18 and by 3-7 percent among adults, the Congressional Budget Office estimates.  Cutting consumption among young people is especially important:  four in five adult smokers started before they were 18.
  3. Health benefits for low-income people would more than compensate for the regressive tax increase. Some opponents argue that raising tobacco taxes would unfairly affect low-income people since they have higher smoking rates. But low-income people would also benefit more from the health improvements from cutting consumption, since they smoke more and are more likely than better-off people to stop smoking (or not start) if tobacco taxes rise.  Lower-income families would also benefit more from the expanded access to early childhood education that these tax revenues would finance.
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More About Chuck Marr

Chuck Marr

Chuck Marr is the Director of Federal Tax Policy at the Center on Budget and Policy Priorities.

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2 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Merius Atangcho #

    Low-income and poor children and young adults, particularly in inner cities, are by far more sickened by fossil fuel emissions than by second-hand tobacco smoke, and rates of asthma, among other ailments, among this group show just some of the devastating, yet more clearly defined and traceable, consequences.

    While a cigarette tax, a tax disproportionately on the poor, is enticing from a public health perspective, even more enticing would be a “gas guzzler tax” or an expanded excise tax on gasoline, or both (that can be used to expand public transportation).
    The cumulative benefits to the environment, public health, and the economy would be far greater for all than the usual political expedient of taxing mainly the poor supposedly for their own good.

    Of course, GM and Ford still reign supreme while the tobacco industry, along with its product, has lost much of its standing, making cigarettes an easier target. This point, however, should not be lost on us since it makes clear that there are better ways that ought to be prioritized, yet we’re stuck with (and debating) the class-based alternative that prioritizes sacrifice from those without political standing.

    • CBPP #

      Thanks for your thoughtful comment. I completely agree with you that tax policy should shift in the direction of higher taxes on fossil fuels. A broad-based carbon tax, combined with protections for low- and moderate-income people, would be both good for the environment and the economy. This is not, however, an either/or proposition. There is an important place for higher tobacco taxes within an overall progressive tax system. Put simply, tobacco taxes save lives and its health benefits flow disproportionately to poor people.

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