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CNN is reporting that President Obama wants to raise federal cigarette taxes by 94 cents per pack. The tax is being sold as a way to help the poor, with the revenue supposedly going to early childhood education programs. But if the results of state cigarette taxes are any indication, the tax will disproportionately hurt the poor, fund programs directly connected to politicians and negatively impact small businesses, all while consistently failing to meet revenue goals.
Minnesota failed to fix its budget with a cigarette tax in 2005. And the state will fail if tries again.July 8, 2011
There is a sense of bitter irony in Democratic Minnesota Gov. Mark Dayton’s new cigarette tax proposal, which is aimed at bridging the Gopher State’s budget gap. In 2005, then-Gov. Tim Pawlenty used an increase in cigarette taxes—which he called a “user fee”—to solve a state budget crisis that had shut down the government. Yet today Minnesota finds itself right back in state finance hell. As the Reason Foundation’s Anthony Randazzo and Carson Bruno explain, trying to cover a budget shortfall with a cigarette tax—or any sin tax—is never a good idea.
Arizona’s unfortunate reliance on tobacco industry revenues to fund health insurance.July 6, 2011
Arizona has a major public health problem: Too few people are smoking.
That’s not the only fiscal problem the state faces. But it’s one of them. Like many states, Arizona’s public finances are in miserable shape. And according to Associate Editor Peter Suderman, much of the state’s budget trouble can be attributed to a decade-old decision to finance an expansion of low-income health insurance coverage with revenue dependent on tobacco industry profits.
A little more than a decade ago, the state grew its low-income health insurance rolls, claiming the new enrollees would be paid for by revenue from a deal with tobacco industry. Now, with smoking rates (and tobacco industry revenues) falling, a budget crisis brewing, and a growing number of individuals eligible for Medicaid, the state has chosen to pare back its health coverage for low-income adults.
The government’s fuel-economy standards should come with a warning label.July 1, 2011
When Washington unveiled its graphic new warning labels for cigarettes last week, several wits asked whether the federal government would slap similar warnings on its own products. To cite just one example: How many innocent civilians have died from unnecessary wars?
True, everyone already knows war is hell. But as A. Barton Hinkle notes, government policies can kill people in far less obvious ways. Take vehicle fuel-efficiency standards. As Hinkle explains, higher fuel-economy standards would increase highway fatalities because the most effective method of increasing gasoline mileage is to make cars smaller and lighter, which makes them more dangerous. Shouldn't that come with a warning label?
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