House Votes to Fund General Spending Program With Arbitrary and Narrow Tax Increase

September 26, 2007

The U.S. House voted yesterday to raise the federal cigarette tax to fund an expansion of SCHIP, the children’s health program. More from CNN.COM:

A showdown between Congressional Democrats and the White House over children’s health insurance is clouding the outlook of a proposed $36 billion tobacco tax hike.
The House is expected to vote on legislation Tuesday using the tobacco tax hike to increase funding for the Children’s Health Insurance Program, or CHIP. The Senate will likely quickly follow suit, but U.S. President George W. Bush has already said he’ll veto the bill.

Lawmakers and aides say the CHIP bill’s defeat won’t damp Congress’ willingness to raise the tobacco tax.

But because it’s now linked to CHIP, the tax hike might not emerge from Congress any time soon. If Congress sustains that veto for the duration of Bush’s tenure, smokers would save $6 billion in 2008 alone, according to the Joint Committee on Taxation.

“The fight will not end this week,” House Speaker Nancy Pelosi, D-Calif., said Tuesday.

Of course, the proponents of such a bill have done exactly what they planned to do: portray it as “big tobacco versus children.” It’s kind of sad as we could extend this logic to an infinite number of government programs financed by tax hikes on some industry. In fact, we could spin it 180 degrees and put in place a tax on smoking prevention products like Nicorette and use the same logic: “Who do you care more about? Big pharmaceutical companies or children’s health?”


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