Kristof Says Taxing Stupidity Doesn’t Make People Any Smarter, Just Poorer

April 1, 2010

Savvy personal finance reporter Kathy Kristof has a good column today titled, “Taxing Stupidity” on CBS MoneyWatch. She discusses the increasingly long roster of taxes that governments enact to allegedly improve our behavior. Nanny taxes, as we often call them.

And she correctly observes that in many cases, these ruler-across-the-knuckles taxes don’t work. We keep right on consuming what we want. For one product in particular, the government consistently rewards our stubborn misbehavior with higher and higher taxes, as if to test the theory that a tax can get so high that it amounts to prohibition: the tax on tobacco. Even though most smokers are poor, the federal and state governments keep pouring on the taxes. They averaged 75 cents per pack 10 years ago, and now they average $2.30. Yet according to the government’s survey of tobacco use, we’ve only slightly cut back our smoking.

In New York, for example, where the state tax was 56 cents in 2000 and is now about to be raised from $2.75 to $3.75 (on top of $1.50 in the city), the smoking rate has dropped just a bit, from 21.6% in 2000 to 18.9% in 2007 (latest year). Prominent scholars believe that higher taxes aren’t even responsible for this reduction, but rather that the motivating factors have instead been stricter regulations, such as forbidding smoking in offices, bars and restaurants and limiting the availability of cigarette machines.

My favorite line in Kristof’s column was her description of how Botox wiggled off the hook as a tax target in the big health care bill, while tanning beds got skewered.

But why exempt Botox? Is it just because Botox hasn’t been around long enough to know whether the long-term effects of injecting poison under your skin to freeze your face will have today’s pretty people puffed up like a bunch of tainted cans?


Related Articles