Unintended consequence or deliberate attack on the poor and elderly?

[David S]

http://www.detnews.com/apps/pbcs.dll/article?AID=/20060606/POLITICS/606060397

Cigarette tax singes poor, old
State slaps 3,500 more smokers with bills for buying cartons online.
Sarah Ryley / The Detroit News


MOUNT CLEMENS -- When Marilyn Mostek, a senior living in a subsidized apartment, heard she could save $20 on a carton of cigarettes by ordering from an out-of-state Indian reservation, she thought she had found a clever way to save money.

Those savings went up in smoke on May 19 when she received a bill from the state of Michigan for $511 in unpaid cigarette taxes -- nearly half of her fixed monthly income. Her neighbor, Robert Stutsman, received a bill the same day for $744.

Mostek, 69, and Stutsman, 75, are among 11,000 Michigan residents who over the past year and a half have felt the pinch of a state crackdown on people who have avoided Michigan's cigarette tax by buying from out-of-state vendors online.

The bills, averaging $1,787, have hit the elderly and poor particularly hard.

[Gabu]

I've got an idea: don't buy cigarettes...

Of course this wasn't a "deliberate attack on the poor and elderly".  Don't be silly.

[© tweed]

It's an effort to aid the poor and elderly.

[David S]

Before the tax was passed it was pointed out that it would affect the poor and the elderly the most.

[David S]

It's an effort to aid the poor and elderly.

Ask the poor elderly lady who got stuck with a bill for $511 how much it "aids" her.

[CARLHAYDEN]

http://www.detnews.com/apps/pbcs.dll/article?AID=/20060606/POLITICS/606060397

Cigarette tax singes poor, old
State slaps 3,500 more smokers with bills for buying cartons online.
Sarah Ryley / The Detroit News


MOUNT CLEMENS -- When Marilyn Mostek, a senior living in a subsidized apartment, heard she could save $20 on a carton of cigarettes by ordering from an out-of-state Indian reservation, she thought she had found a clever way to save money.

Those savings went up in smoke on May 19 when she received a bill from the state of Michigan for $511 in unpaid cigarette taxes -- nearly half of her fixed monthly income. Her neighbor, Robert Stutsman, received a bill the same day for $744.

Mostek, 69, and Stutsman, 75, are among 11,000 Michigan residents who over the past year and a half have felt the pinch of a state crackdown on people who have avoided Michigan's cigarette tax by buying from out-of-state vendors online.

The bills, averaging $1,787, have hit the elderly and poor particularly hard.

Well, there are two seperate components.

First, whereas conservatives tend to prefer taxes which generate revenue to fund essential public services to be raised in the most painless way possible, liberals tend to prefer to use the tax system to punish behavior of which they disapprove.

Second, don't you have indian reservations in Michigan.  People here go to the reservation store to buy tobacco free from the state tax.  Maybe the state government is trying to redirect business to the indians.

[Gabu]

Before the tax was passed it was pointed out that it would affect the poor and the elderly the most.

It seems to me that it's an entirely voluntary tax.  It's not as if they got into a back room and were like "I KNOW, LET'S TAX THE PANTS OFF OF THE POOR AND ELDERLY LOL".

Of course it's going to hit the poor and the elderly the most: it's a sales tax.  All sales taxes do.

[○∙◄☻¥tπ[╪AV┼cVê└]

Before the tax was passed it was pointed out that it would affect the poor and the elderly the most.

It seems to me that it's an entirely voluntary tax.  It's not as if they got into a back room and were like "I KNOW, LET'S TAX THE PANTS OFF OF THE POOR AND ELDERLY LOL".

Of course it's going to hit the poor and the elderly the most: it's a sales tax.  All sales taxes do.

No kidding. If they truly wanted to screw the poor, they would have copied Washington's tax structure. However, Michigan is still one of the 49 states with a regressive tax structure, and Delaware is only barely progressive.

[Nym90]

I agree that cigarette taxes are highly regressive, not only because they are a sales tax but also because poor people are more likely to smoke than wealthy people are.

I'm ambivalent on the issue of cigarette taxes. On the one hand, they do act as a disincentive for people to smoke, which is a definite advantage of them, but as far as revenue generation is concerned, there are many other methods I would prefer more.

[Nym90]

http://www.detnews.com/apps/pbcs.dll/article?AID=/20060606/POLITICS/606060397

Cigarette tax singes poor, old
State slaps 3,500 more smokers with bills for buying cartons online.
Sarah Ryley / The Detroit News


MOUNT CLEMENS -- When Marilyn Mostek, a senior living in a subsidized apartment, heard she could save $20 on a carton of cigarettes by ordering from an out-of-state Indian reservation, she thought she had found a clever way to save money.

Those savings went up in smoke on May 19 when she received a bill from the state of Michigan for $511 in unpaid cigarette taxes -- nearly half of her fixed monthly income. Her neighbor, Robert Stutsman, received a bill the same day for $744.

Mostek, 69, and Stutsman, 75, are among 11,000 Michigan residents who over the past year and a half have felt the pinch of a state crackdown on people who have avoided Michigan's cigarette tax by buying from out-of-state vendors online.

The bills, averaging $1,787, have hit the elderly and poor particularly hard.

Well, there are two seperate components.

First, whereas conservatives tend to prefer taxes which generate revenue to fund essential public services to be raised in the most painless way possible, liberals tend to prefer to use the tax system to punish behavior of which they disapprove.

Second, don't you have indian reservations in Michigan.  People here go to the reservation store to buy tobacco free from the state tax.  Maybe the state government is trying to redirect business to the indians.

Yes, there are quite a few reservations in Michigan, and indeed the prices are generally a bit lower there (not tremendously lower though, they just make a much bigger profit off of them I would assume). However, there aren't any reservations anywhere near the major population center of southeast Michigan (the closest would be in Mt. Pleasant, in the almost exact middle of the Lower Peninsula); most of them tend to be in the northern Lower Peninsula and in the Upper Peninsula.

[© tweed]

It's an effort to aid the poor and elderly.

Ask the poor elderly lady who got stuck with a bill for $511 how much it "aids" her.

Her medical bills for lung cancer will be far more than that.

[WalterMitty]

I've got an idea: don't buy cigarettes...

Of course this wasn't a "deliberate attack on the poor and elderly".  Don't be silly.

correct, gabu.

i believe cigarette taxes are far too low.  why not exploit the addictions of the ignorant?

[David S]

Lets take an example; Rich man earns $100,000 per year. Poor man earns $10,000. Both men smoke a pack a day. At $2.00 per pack the annual tax for both men is $730. The effective tax rate as a percentage of income is as follows:
Rich man  0.73%
Poor man  7.3%

Its odd to see so many Democrats supporting such a regressive tax.

[Gabu]

Lets take an example; Rich man earns $100,000 per year. Poor man earns $10,000. Both men smoke a pack a day. At $2.00 per pack the annual tax for both men is $730. The effective tax rate as a percentage of income is as follows:
Rich man  0.73%
Poor man  7.3%

Its odd to see so many Democrats supporting such a regressive tax.

Let's take another example.  Rich man earns $100,000 per year.  Poor man earns $10,000. Rich man smokes a pack a day.  Poor man doesn't smoke.  At $2.00 per pack the annual tax for the rich man is $730.  The annual tax for the poor man is $0.  The effective tax rate as a percentage of income is as follows:

Rich man  0.73%
Poor man  0%

This tax is such a self-inflicted thing that I honestly don't care.  You're acting as if it's involuntary for someone to smoke a pack a day and that this is a universal tax.

[WalterMitty]

Lets take an example; Rich man earns $100,000 per year. Poor man earns $10,000. Both men smoke a pack a day. At $2.00 per pack the annual tax for both men is $730. The effective tax rate as a percentage of income is as follows:
Rich man  0.73%
Poor man  7.3%

Its odd to see so many Democrats supporting such a regressive tax.

it's a voluntary tax.  no one is forced to pay it.  

it is odd to see libertarians oppose voluntary taxation.

[Nym90]

Lets take an example; Rich man earns $100,000 per year. Poor man earns $10,000. Both men smoke a pack a day. At $2.00 per pack the annual tax for both men is $730. The effective tax rate as a percentage of income is as follows:
Rich man  0.73%
Poor man  7.3%

Its odd to see so many Democrats supporting such a regressive tax.

Let's take another example.  Rich man earns $100,000 per year.  Poor man earns $10,000. Rich man smokes a pack a day.  Poor man doesn't smoke.  At $2.00 per pack the annual tax for the rich man is $730.  The annual tax for the poor man is $0.  The effective tax rate as a percentage of income is as follows:

Rich man  0.73%
Poor man  0%

This tax is such a self-inflicted thing that I honestly don't care.  You're acting as if it's involuntary for someone to smoke a pack a day and that this is a universal tax.

True, and perhaps the tax convinces the poor man to quit smoking when he otherwise wouldn't; that produces benefits not only for him but for everyone in the form of lower health care costs. The poor man is much more likely to be persuaded since he can much less afford to smoke.

As I said, I'm ambivalent about it overall; I do not like the regressive nature of it, but I oppose it much less than the general sales tax. Unlike general sales taxes, which discourage people from taking an action beneficial to the economy, at least this one discourages people from doing something harmful.

[Gabu]

As I said, I'm ambivalent about it overall; I do not like the regressive nature of it, but I oppose it much less than the general sales tax. Unlike general sales taxes, which discourage people from taking an action beneficial to the economy, at least this one discourages people from doing something harmful.

But the thing about it is that it's not really a regressive tax.  It is in the sense that poor people pay a higher percentage of their total income than rich people do, all things equal, but the amount you pay can also be controlled by how much you buy.

A cigarette tax is not something that I would actively pursue, but it also is not something that I particularly care about.

[opebo]

Obviously all harmful consequences done to the poor by the State are 'intentional', in the sense that the State exists to serve the owning class - i.e., the powerful.

[Nym90]

As I said, I'm ambivalent about it overall; I do not like the regressive nature of it, but I oppose it much less than the general sales tax. Unlike general sales taxes, which discourage people from taking an action beneficial to the economy, at least this one discourages people from doing something harmful.

But the thing about it is that it's not really a regressive tax.  It is in the sense that poor people pay a higher percentage of their total income than rich people do, all things equal, but the amount you pay can also be controlled by how much you buy.

A cigarette tax is not something that I would actively pursue, but it also is not something that I particularly care about.

Well I define a regressive tax as one that the poor pay a higher percentage of their income towards than the wealthy, all else being equal.

So yes, I agree that the optional nature of it does make it less bad, but it doesn't really make it any less regressive.

[MODU]

I've got an idea: don't buy cigarettes...

Of course this wasn't a "deliberate attack on the poor and elderly".  Don't be silly.

[John Dibble]

Option 2. The government screws up a lot. They generally don't intend a lot of the bad stuff that happens.

Lets take an example; Rich man earns $100,000 per year. Poor man earns $10,000. Both men smoke a pack a day. At $2.00 per pack the annual tax for both men is $730. The effective tax rate as a percentage of income is as follows:
Rich man  0.73%
Poor man  7.3%

Its odd to see so many Democrats supporting such a regressive tax.

it's a voluntary tax.  no one is forced to pay it.  

it is odd to see libertarians oppose voluntary taxation.

It's odd that libertarians oppose the government using it's taxation power in an attempt at social engineering?

And it's only a truly voluntary tax if you don't have to pay it when you buy the product - I mean, if the tax was applied to clothing or food would you be calling it a voluntary tax? Or heck, property taxes are voluntary, right? Just don't buy a house! So no, it's not a voluntary tax. A truly voluntary tax would be completely voluntary, not a matter of not buying a certain product.

[David S]

Look at the underlying rationale behind this tax: Government through medicaid is responsible for the healthcare costs of the poor, therefore government has the right to control unhealthy habits of all citizens. In this case the control is to apply extraordinarily high taxes on the unhealthy product, cigarettes. But couldn't the same argument be made for all products the government deems to be unhealthy? Foods that are high in saturated fat and cholesterol certainly contribute to health problems. Couldn't the government use the same logic to apply extreme taxes on those products as well. Today you can get a bacon and egg breakfast for maybe $5.00 at many restaurants. If you applied a similar tax to that it would raise the price to about $15.00. And how about cheeseburgers, french fries, pizza, tacos, ribs, fried chicken etc? Do you want government using the power of taxation to force you to eat only food the government deems OK? At what point do we stop calling this place "The land of the free"?

[NewFederalist]

And don't forget the tobacco subsidies to encourage production in the first place. What a system!

[WalterMitty]

And don't forget the tobacco subsidies to encourage production in the first place. What a system!

i thought the subsidies ended a few years ago when they had the buyout program?

[NewFederalist]

And don't forget the tobacco subsidies to encourage production in the first place. What a system!

i thought the subsidies ended a few years ago when they had the buyout program?

As of 2004 (the last year I could find subsidy data) it does not appear so.