mercredi, juillet 13, 2005

If You Were in One of Those Huge Row Boats and Needed to Go Faster, Would You Ask 1 in 5 People to Row Harder?

Here’s a list of things I don’t like:

Our President’s priorities (notice the crafty word-smithing to avoid indefinite incarceration as an enemy combatant).

The priorities of the Minnesota Governor (worst ever; man, he’s horrible; I plan to work aggressively against his campaign; he’s just plain lousy)

Cigarettes (and within that, people who litter by throwing cigarette butts all over my precious land – they’re scourges, all!)

The person who egged my wife’s car last night (that’s unnecessary – oh, and watch your back).

Here in Minnesota, our Governor is proposing a 75 cent per pack cigarette tax (er…fee) to address the revenue problem that we don’t have (according to our horrible worst-ever Governor with no redeeming qualities, we have a “spending problem” that we must address by increasing revenue through more gambling! No, I didn’t make that up, and yes, I vomited while typing that and yes vomitice is easier to clean up than dried-on egg). Anyway, I don’t like this governor.....'s proposal. Here’s why.

First, let me start by saying I hate smoking (not just cigarettes).

Second, let me say that I’m a hypocrite.

Third, let me say that I’m a hypocrite because I enjoy the occasional cigar, which makes me a smoker*. There, I said it.

Now let me say that I was thinking about it this morning, and here are my guiding principles with respect to tax (er…fee) policy. And yes, I’m serious, I was thinking about tax policy this morning while scrubbing dried egg off our low mileage 1998 Toyota Corolla LE (don’t hate).

First, within a geographic area, taxes which impact all citizens a little bit should be favored over taxes which impact a few citizens a lot. For example, I prefer an income tax to a cigarette tax.

Second, within a taxed group, if disparities must exist, additional burdens should be shouldered by those best able to bear them.

Third, if user-based taxes are deemed necessary, the following factors merit consideration:

a. the number of people in the population who use the taxed item (toilet paper taxes are better than yacht taxes).

b. the impact to low-income communities (a mink coat tax is better than a milk tax).

c. the potential to re-direct social behavior through the tax (a gas tax is better than a vitamin tax - an egg tax is always a good idea).

d. tea should never be taxed; it’s touchy – people tend to flip out.

Fourth, I think it is appropriate for governments to consider their rank among other similar governmental entities, but I would not prioritize it with my other criteria. If Minnesota has the highest corporate tax and wisconsin (our neighbor to the east) has the lowest, that will have a negative impact on Minnesota’s ability to attract and retain corporations and industry. This is true even though Minnesota is superior to wisconsin in every single way. It is appropriate to consider such things. When I say similar governmental entities, I mean two things. First, a state should consider where it ranks in comparison to other states not in comparison to other counties. But I also mean that a state should compare itself to similar states (unemployment rate, population, density, median income, size, overall economy, etc., etc., should all be considered. To state it bluntly, Connecticut should not compare itself to Mississippi).

Fifth, the impact of taxes on the larger economy should also be considered. For example, a 25% sales tax is a bad idea.

So, back to the cigarette tax. By my way of thinking, it is not a good idea. Let’s apply my tax principles, shall we?

First, I did some research, and I found that as of 2002 (the most recent data I could find) 21.6% of Minnesotans are/were smokers. Applying my policy that it is better to tax everyone a little bit than tax a few people (21.6%) a lot (75 cents per pack - $273.75 per annum for a pack-per-day smoker), you can see it does not square with ILIM tax policy.

Second, low-income folks are more likely to smoke than high income folks. My research shows that 32.9% of low income persons smoke, versus 22.2% of folks at or above the poverty level. So, this tax (unlike my fabled mink coat tax) has a disproportionate impact on the poor.

BTW, here is some more data to geek out on: (1) families with the highest income levels reduced smoking 62% from 1965 to 1999; while low income families decreased only 9%; (2) 36% of Medicaid recipients are smokers; (3) 31% of adults who did not graduate from high-school are smokers; 12 percent of college grads smoke, and 7 percent of folks with a graduate degree smoke.

Third, as already established, 21.6% of Minnesotans smoke. We got nothing on Kentucky (32.4%), but Utah (12.7%) and the Virgin Islands (9.4%) make us look really bad. Connecticut (19.3%), Massachusetts (18.9%), New Jersey (18.9%) and California (16.4%) round out the top five and mean that 4 of the top 5 are blue states (the bottom twelve are all red states – I just love fueling that blue/red feud – well and culture wars in general)! BTW, number 6 is D.C. with an unimpeachable 20.3% - but D.C. is more of a cigar town (interpret that as you will).

Where was I? Oh yeah, so, we have a tax burden, but we are only asking approximately 1 in 5 folks to lift it.

Among those 1 in 5 (the 21.6% of Minnesotans who smoke), a good portion of them are not well-positioned to shoulder the burden because their income is low.

And though some smokers will quit and therefore there is a potential to re-direct social behavior with the tax (er…fee), there is the equal likelihood that a black market will emerge or that users will buy cigarettes online (here's one dopeman), or from Indian Casinos, or in neighboring states. And say now, in America, after all this time, can we just stipulate that cost alone will deter very few addicts – after all, history teaches us that the jonesing junkie will get fixed. You dig?

This tax (er…fee) if passed, will give Minnesota one of the highest cigarette taxes in the nation. It will give us the highest such tax in the upper Midwest. But, truth be told, I don’t really care what our rank is.

I do care that we have a budget deficit, and instead of sharing the burden as a state, we are allocating it to a small (and downtrodden) community - a community that cannot, across its ranks, bear the burden well. I care that we do this in spite of ample other ways to raise revenue (no, no, no, not racino!) - ways that are not nearly as regressive. If we need more revenue, and apparently we do, then the best way to raise it has to be more egalitarian. Let’s all lift the burden together - let's all row harder.
If all else fails…well then…I say we apply ILIM tax policy number six and (when in doubt): Tax the Rich!

*Smokers are defined as those who currently smoke every day or some days (whatever that means) and who have smoked at least 100 cigarettes in their lifetime. Under that definition, I am not a smoker. I usually smoke about six or seven cigars a year (and that number might be inflated – let’s call it four per year, shall we?). At the present rate, I'll be a smoker in 2023.