"If we have to pay 30 cents more for cigarettes, we're gonna have to quit"..... Right. You'll pay $10 for a pack of Cancer Sticks, you bunch of Addicts!!
Gov. Sanford put forth his new budget, and it looks pretty good. The most important points are not in the numbers themselves, but what they show - that Mark Sanford is listening to his critics, but not so much that he changes his philosophy, or appear to be a flip-flopper.
The most talked about aspect is his continued cutting of income taxes, but offsetting it by raising the cigarette tax by 30 cents a pack. While it may seem that he is reversing course, there are many points to be encouraged by with this proposal. Most importantly, it shows that Sanford listens and is willing to implement ideas of even his opponents.
Last year, Oscar Lovelace made raising the cigarette tax a pillar of his campaign. The main difference between the two is that Lovelace wanted to use the tax to fund Medicaid, and Sanford is not. Mark took the idea and is doing it right. Using the tax dollars to fund Medicaid addresses the Medicaid crisis the wrong way. The problem isn't that funding is poor, it's that costs are skyrocketing. We are learning a lesson with education that extra spending doesn't always fix a problem, to do the same with Medicaid would be a tragic mistake.
OK, now we address the concern that it will cause deficits in the state budget. Some (including some elected officials) are worried that raising the cigarette tax will cause enough people to stop smoking, and that the budget will fall far short. This is the STUPIDEST complaint that I have heard.........Humor me as I discuss some economic theory.
Cigarette taxes are a consumption tax, so you can avoid that tax by not using that product. The thought that a pack of cigarettes being 30 cents higher will cause enough of a mass quitting by smokers is ridiculous. For the tax increase to cause a budget shortfall, about 80% of all smokers would have to go cold turkey. This won't happen, because smokers are addicted to cigarettes. Therefore , no matter what price butts are, smokers will buy them. In economics, this is called Inelastic Demand. There will be a test at the end. I've heard people complain that they'd quit smoking at $1.00, $1.50, $2, $3, $4 and $5 per pack elsewhere, and they STILL SMOKE. Why? They are Addicts.
So, while everyone gets a tax break for a few bucks, without getting the feeling that they are being punished for making more, the shortfall is made up by a combination of taxes paid for by people who have the option of not smoking, and people putting their extra money back into the economy. Sure, cutting taxes and not raising them on cigarettes would work too, but we're dealing with a House and Senate that is hellbent on keeping spending as high as possible to finance special bacon and sausage projects. This proposal represents a willingness to compromise and still stick to his "no spending increases" motto.
Mark Sanford is not an insulated, out of touch politician like his critics say... He has shown the ability to listen, to take the credible ideas and modify them and make them his own by his rules. Pretty sharp. If the rest of the politicians in Columbia are taking notice of this, we may have the start of a real give and take that benefits us all. And NO, I am not paid by Gov. Sanford to write this stuff........ i'm just a big fan!
5 comments:
Mike, roughly where do you think the plateau ends on this Laffer curve?
Aside from that have you given any consideration to the taxation economics of the Laffer curve and one premise of the Matrix Agent Smith offered, that human existance craves misery?
When smoking bills equal car payments, maybe some people will smarten up.
The Laffer Curve has passed me by, but I do remember demand elasticity on cigarettes, crack, pot, video games and other addictive items.
Ok Mike second time today we disagree. A tax is a tax by any name. Example the lotto is another tax on poor people. Smoking kills it also raises the price of medical bills etc. What else does and maybe we should tax others are fuel, cars they cause global warming if you believe that and I do also they pollute the air we breath across the globe which in turn raises the cost of medical etc. Alcohol causes deaths by the hundreds of thousands and raises the cost of medical etc. Fast food from any brand McDonalds, Hardees etc. Causes deaths, burns etc. and raises the cost of medical treatment. The list can go on and on and if we open one door then it is loose. This is not a far fetched train of thought. I like the Governor but taxation is taxation. We should also take lard off the shelves at the Piggly Wiggly while we are at it or let us put another 30% tax on it to pay for the medical problems associated with it and so forth but make sure we put it in the general fund where the public want know about it.
No argument there, moye. However, we are talking about a House and Senate that seems hellbent on staying well-financed by sin-taxing us to death. Does Sanford have much choice but to compromise with them on his terms, or to let them throw money away down the Medicaid drain?
I will ask him that this week and get back to you.
Post a Comment