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Congressional Democrats Propose Cigarette Tax Hike to Pay for Children's
Health Coverage
Sunday, September 30, 2007
WASHINGTON - Congressional Democrats have chosen an unlikely source to pay
for the bulk of their proposed $35 billion increase in children's health
coverage: people with relatively little money and education.
The program expansion passed by the House and Senate last week would be
financed with a 156 percent increase in the federal cigarette tax, taking it
to $1 per pack from the current 39 cents. Low-income people smoke more
heavily than do wealthier people in the United States, making cigarette
taxes a regressive form of revenue.
Democrats, who wrote the legislation and provided most of its votes,
generally portray themselves as champions of the poor. They do not dispute
that the tax plan would hit poor communities disproportionately, but they
say it is worth it to provide health insurance to millions of modest-income
children.
All the better, they say, if higher cigarette taxes discourage smoking.
"I'm very happy that we're paying for this," Senate Majority Leader Harry
Reid, D-Nev., said in an interview Friday, noting that the plan would not
add to the deficit. "The health of the children is extremely important," he
said. "In the long run, maybe it'll stop people from smoking."
Congress probably will revisit the cigarette tax issue soon because
President Bush has pledged to veto the proposed $35 billion expansion of the
State Children's Health Insurance Program. The decade-old program helps
families buy medical coverage if their income is too high to qualify for
Medicaid.
Bush has proposed a more modest growth for the program, and both political
parties seem inclined to pay for it through a tax on an unpopular group,
cigarette smokers.
By most measures, the average smoker is less privileged than the average
nonsmoker. Nearly one-third of all U.S. adults living in poverty are
smokers, compared with 23.5 percent of those above the poverty level,
according to government statistics.
The American Heart Association reports that 35 percent of people with no
more than 11 years of schooling are smokers. Those with 16 or more years of
formal education smoke at a 12 percent rate.
Non-Hispanic black men smoke at slightly higher rates than do non-Hispanic
white men. But the reverse is true among women.
The demographics of smoking and taxation received scant attention during
last week's House and Senate debates, perhaps because many Democrats and
Republicans agree that cigarettes are the best target for tax increase if
the insurance program were to grow. A few lawmakers, however, took a swing.
"I know there is very little sympathy for smokers these days," Rep. Jack
Kingston, R-Ga., said during the House debate. "But it is still a tax
increase on the backs of the smokers. And in order to get enough money to
pay for this, it would require 22 million new smokers."
Rep. Frank Pallone, D-N.J., defended putting the burden of expanded medical
care on smokers.
"The tobacco tax is a great way to pay for it," he said, "because if you tax
people who are smoking and they smoke less, then we have less health
problems."
Rep. Jim McCrery, R-La., did not buy that logic. "To propose funding a
growing program with a declining revenue source is, I would submit,
irresponsible fiscal policy," he said.
If the federal cigarette tax nears $1 per pack, smokers in many states will
pay hefty sums into government coffers unless they kick their habit. On top
of the federal tax, New Jersey levies a $2.57 per pack tax on cigarettes,
followed by Rhode Island at $2.46.
California is near the middle, at 87 cents a pack. Three states tax
cigarettes at less than 30 cents per pack. South Carolina is the lowest at 7
cents.
Bill Phelps, spokesman for Philip Morris USA, based in Richmond, Va., said a
steep federal tax increase could accelerate the national decline in smoking
to the point that the insurance would have to find other revenue sources.
The average U.S. price of a pack of cigarettes has risen by 80 cents since
1999, Phelps said, largely because of state tax increases. State and federal
governments received more than $21 billion in cigarette excise taxes in the
2006 budget year, he said, "so we think this trend is unfair to adults who
smoke and to retailers who sell tobacco products."
In Congress, these groups receive little sympathy. But some lawmakers say
voters should know the details of the insurance program's proposed funding
structure.
Rep. Mike Pence, R-Ind., who spoke against the bill in last week's debate,
said: "The headline ought to read, 'Smokers in America to pay for
middle-class welfare.'"
Congressional Democrats Propose Cigarette Tax Hike to Pay for Children's
Health Coverage
Sunday, September 30, 2007
WASHINGTON - Congressional Democrats have chosen an unlikely source to pay
for the bulk of their proposed $35 billion increase in children's health
coverage: people with relatively little money and education.
The program expansion passed by the House and Senate last week would be
financed with a 156 percent increase in the federal cigarette tax, taking it
to $1 per pack from the current 39 cents. Low-income people smoke more
heavily than do wealthier people in the United States, making cigarette
taxes a regressive form of revenue.
Democrats, who wrote the legislation and provided most of its votes,
generally portray themselves as champions of the poor. They do not dispute
that the tax plan would hit poor communities disproportionately, but they
say it is worth it to provide health insurance to millions of modest-income
children.
All the better, they say, if higher cigarette taxes discourage smoking.
"I'm very happy that we're paying for this," Senate Majority Leader Harry
Reid, D-Nev., said in an interview Friday, noting that the plan would not
add to the deficit. "The health of the children is extremely important," he
said. "In the long run, maybe it'll stop people from smoking."
Congress probably will revisit the cigarette tax issue soon because
President Bush has pledged to veto the proposed $35 billion expansion of the
State Children's Health Insurance Program. The decade-old program helps
families buy medical coverage if their income is too high to qualify for
Medicaid.
Bush has proposed a more modest growth for the program, and both political
parties seem inclined to pay for it through a tax on an unpopular group,
cigarette smokers.
By most measures, the average smoker is less privileged than the average
nonsmoker. Nearly one-third of all U.S. adults living in poverty are
smokers, compared with 23.5 percent of those above the poverty level,
according to government statistics.
The American Heart Association reports that 35 percent of people with no
more than 11 years of schooling are smokers. Those with 16 or more years of
formal education smoke at a 12 percent rate.
Non-Hispanic black men smoke at slightly higher rates than do non-Hispanic
white men. But the reverse is true among women.
The demographics of smoking and taxation received scant attention during
last week's House and Senate debates, perhaps because many Democrats and
Republicans agree that cigarettes are the best target for tax increase if
the insurance program were to grow. A few lawmakers, however, took a swing.
"I know there is very little sympathy for smokers these days," Rep. Jack
Kingston, R-Ga., said during the House debate. "But it is still a tax
increase on the backs of the smokers. And in order to get enough money to
pay for this, it would require 22 million new smokers."
Rep. Frank Pallone, D-N.J., defended putting the burden of expanded medical
care on smokers.
"The tobacco tax is a great way to pay for it," he said, "because if you tax
people who are smoking and they smoke less, then we have less health
problems."
Rep. Jim McCrery, R-La., did not buy that logic. "To propose funding a
growing program with a declining revenue source is, I would submit,
irresponsible fiscal policy," he said.
If the federal cigarette tax nears $1 per pack, smokers in many states will
pay hefty sums into government coffers unless they kick their habit. On top
of the federal tax, New Jersey levies a $2.57 per pack tax on cigarettes,
followed by Rhode Island at $2.46.
California is near the middle, at 87 cents a pack. Three states tax
cigarettes at less than 30 cents per pack. South Carolina is the lowest at 7
cents.
Bill Phelps, spokesman for Philip Morris USA, based in Richmond, Va., said a
steep federal tax increase could accelerate the national decline in smoking
to the point that the insurance would have to find other revenue sources.
The average U.S. price of a pack of cigarettes has risen by 80 cents since
1999, Phelps said, largely because of state tax increases. State and federal
governments received more than $21 billion in cigarette excise taxes in the
2006 budget year, he said, "so we think this trend is unfair to adults who
smoke and to retailers who sell tobacco products."
In Congress, these groups receive little sympathy. But some lawmakers say
voters should know the details of the insurance program's proposed funding
structure.
Rep. Mike Pence, R-Ind., who spoke against the bill in last week's debate,
said: "The headline ought to read, 'Smokers in America to pay for
middle-class welfare.'"
