In this episode my “Taxation is Theft” flag makes an appearance as we discuss if Taxation if Theft (Spoiler Alert: It Is) and ask who owns you.
California Assemblyman Kevin McCarty (D-Sacramento) wants to make your cigarettes more expensive by making it illegal to buy them with coupons. The logic? The (D)s in this state managed to get voters to kick the per pack taxes on cigarettes up to $2.87 and coupons make smokes cheaper. And?
Well, Smoking is bad. MMMKay?
The trouble with this anti-coupon idea is twofold. First of all 80% of the revenue generated from tobacco taxes goes directly to funding programs for children under five years of age, specifically disadvantaged children. If your stated goal for a tax is to discourage bad behavior then you cannot rely on that very tax revenue to pay for things. In this particular instance we’re paying for programs for disadvantaged children. By stopping people from smoking we’re de facto defunding those programs. I’ll explain further for the math challenged legislators out there.
If you get tax money when Johnny buys “X” product. And then you raise that tax so high that Johnny cannot afford to buy “X” product (the stated goal here), you don’t get that tax money. There is no tax collected on a product that isn’t sold. Well, not yet anyways but this is California so give it time.
I’ll let the California Department of Public Health explain my second point:
Do Higher Tobacco Prices Lead to Tax Evasion and Smuggling?Following a tax increase, many smokers will find a way to buy cheaper cigarettes. Some smokers will try to find cheaper cigarettes on the internet; others will buy their cigarettes on Indian reservations and in casinos or even travel across state lines. This type of individual “casual” evasion does not have a significant fiscal impact on the illicit cigarette market whereas, large-scale bulk tobacco smuggling can be a problem.