Democrats’ Proposed Higher Cigarette Tax Would Harm the Most Vulnerable

House Democrats want to double federal tobacco taxes to help pay for President Joe Biden’s proposed $3.5 trillion reconciliation bill. While increases would add an estimated $96 billion to revenues, Democrats have failed to explain how the tax hikes wouldn’t be a direct attack against the very group of Americans that presidential candidate Joe Biden swore not to harm. 

Notwithstanding, supporters of the bill are busy promoting more altruistic reasons for the proposal, explaining that the higher taxes would cut Americans’ cigarette smoking. Despite supporters’ best efforts, however, the reality is that increasing taxes on tobacco wouldn’t help people live healthier lives. Instead, it would go directly against the Food and Drug Administration’s own strategy for harm-reduction by treating all tobacco products as one and the same, while helping to grow, not “tame,” the robust U.S. illicit cigarette trade.

This would take place following a year of hardship brought about by pandemic-inspired lockdowns and when price inflation is becoming a growing concern in Biden’s America. That is, a tax increase on products mostly consumed by the poorer sectors of American society would push otherwise law-abiding citizens into the black market. It would do nothing to help them quit. 

As noted by Wharton professor of business economics and public policy Benjamin Lockwood in a 2017 study, plenty of evidence suggests that when it comes to consuming what brings us pleasure, we tend to ignore the potential long-term benefits of dropping a bad habit. Instead, we emphasize the upfront benefits in an effort to justify it. In other words, the joy associated with the act of consuming, say, a cigarette or sugary drink outweighs the delayed bad health consequences. If taxes make these products prohibitively expensive, however, consumers will not drop the products but will find novel ways to get them instead. That is precisely the mechanism behind growing cigarette smuggling.

Many actions could be taken by the private sector that would be more effective in helping smokers quit. 

Promoting smoke-free workplaces can reduce cigarette consumption by 29 percent, a major impact when compared to the small, or negligible, effect that higher taxes theoretically would have on smoking.

Additionally, employers could implement smoking-cessation programs to help employees slow down or quit their smoking habits altogether. By offering financial incentives to employees who make an effort to drop tobacco, employers could create a healthy and supportive environment for those who need it most. 

According to the Centers for Disease Control and Prevention, the majority of smokers who want to quit never do. And while smokers are well aware of the health risks, they often see tobacco as a means to deal with stress. So, imposing a higher tax, which would impact poor people most, would not only be ineffective in helping them kick a bad habit, but also harmful. 

Without a supportive environment the poor and vulnerable will not quit but will turn to illicit markets for their cigarettes if necessary. This would create more stress for those who are already suffering. If Democrats want to further damage their standing with some of the poorest among us, this tax increase might just do the trick. 

Chloe Anagnos is the Director of Marketing, Outreach, and Sales at the Independent Institute.
Posts by Chloe Anagnos | Full Biography and Publications
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