TF Cigarette Tax Study Cited in Washington Times Op-Ed on SCHIP

January 2, 2009

Phil Kerpen, Director of Policy at Americans for Prosperity, penned an op-ed in today’s Washington Times on a potential reauthorization of the State Children’s Health Insurance Program (SCHIP) being funded by a 156% increase in the federal cigarette tax, from 39 cents to $1 per pack. Kerpen cites our studies on cigarette taxes to argue that while President-Elect Barack Obama and the Democrats swept into power by promising not to raise taxes on anybody making less than $200,000, this tax increase would hit the poorest Americans hard.

This tax hike would wallop the poor. An analysis by the Tax Foundation found that cigarette taxes hit the poor harder than any other federal tax, hitting the bottom 20 percent, 37 times harder than raising the same amount of revenue from the income tax, because while the income tax falls mostly on people with higher incomes the cigarette tax falls heavily on less affluent Americans.

This dramatic expansion of SCHIP is a bad idea, regardless of how it’s funded. It would be a big step toward universal government children’s coverage which could, in combination with other program expansions, lead to a universal government-run health insurance system. Such a system would be rife with long waiting lines and substandard quality of care — judging by international experience. Indeed this comes at a time when the rest of the world is moving away from government health insurance. This is made even more egregious when funded by a cigarette tax hike that forces the poor to pay for expanding this entitlement into the middle class.

Using Tax Foundation data on state cigarette taxes, the Cincinnati Enquirer reported today that Kentucky Governor Steve Beshear is proposing a 70 cent cigarette tax increase, putting it at $1.

You can learn more about our analysis of cigarette taxes here.


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