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ANALYSIS: Obama's new tobacco tax burdens poor, breaks promise

Thursday, April 2, 2009 | 12:01 a.m. CDT

WASHINGTON — One of President Barack Obama's campaign pledges on taxes went up in puffs of smoke Wednesday.

The largest increase in tobacco taxes took effect despite Obama's promise not to raise taxes of any kind on families earning under $250,000 or individuals earning under $200,000.

Smoking and income

The poor are much more likely to smoke than the rich, a Gallup-Healthways study found last year.

The survey of more than 75,000 people found a close correlation between income and smoking rates, consistent in every category except the lowest bracket, which is populated by many students.

Income groups and the percentage in each who said they smoke:

  • $5,999 or less: 30 percent
  • $6,000 to $11,999: 34 percent
  • $12,000 to $23,999: 30 percent
  • $24,000 to $35,999: 26 percent
  • $36,000 to $47,999: 22 percent
  • $48,000 to $59,000: 21 percent
  • $60,000 to $89,999: 16 percent
  • $90,000 to $119,000: 13 percent
  • $120,000 or more: 13 percent
  • All: 21 percent

 



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This is one tax that disproportionately affects the poor, who are more likely to smoke than the rich, according to public and private research.

To be sure, Obama's tax promises in last year's campaign were most often made in the context of income taxes. But not always.

"I can make a firm pledge," he said in Dover, N.H., on Sept. 12. "Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."

He repeatedly vowed "you will not see any of your taxes increase one single dime."

Now in office, Obama, who stopped smoking but has admitted he slips now and then, signed a law raising the tobacco tax nearly 62 cents on a pack of cigarettes, to $1.01. Other tobacco products saw similarly steep increases.

The extra money will be used to finance a major expansion of health insurance for children. That represents a step toward achieving another promise to make sure all kids are covered.

Obama said in the campaign that Americans could have both — a broad boost in affordable health insurance for the nation without raising taxes on anyone but the rich.

His detailed campaign plan stated that his proposed improvement in health insurance and health technology "is more than covered" by raising taxes on the wealthy alone. It was not based on raising the tobacco tax.

The White House contends Obama's campaign pledge left room for measures such as the one financing children's health insurance.

"The president's position throughout the campaign was that he would not raise income or payroll taxes on families making less than $250,000, and that's a promise he has kept," said White House spokesman Reid H. Cherlin. "In this case, he supported a public health measure that will extend health coverage to 4 million children who are currently uninsured."

In some instances during the campaign, Obama was plainly talking about income, payroll and investment taxes, even if he did not say so.

Other times, his point appeared to be that heavier taxation of any sort on average Americans is the wrong prescription in tough times.

"Listen now," he said in his widely watched nomination acceptance speech, "I will cut taxes — cut taxes — for 95 percent of all working families, because, in an economy like this, the last thing we should do is raise taxes on the middle class."

An unequivocal "any tax" pledge also was heard in the vice presidential debate, another prominent forum.

"No one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised," Joe Biden said, "whether it's their capital gains tax, their income tax, investment tax, any tax."

The Democratic campaign used such statements to counter Republican assertions that Obama would raise taxes in a multitude of direct and indirect ways, recalled Kathleen Hall Jamieson, director of the Annenberg Public Policy Center at the University of Pennsylvania.

"I think a reasonable person would have concluded that Senator Obama had made a 'no new taxes' pledge to every couple or family making less than $250,000," she said.

Jamieson noted GOP ads that claimed Obama would raise taxes on electricity and home heating oil. "They rebutted both with the $250,000 claim," she said of the Obama campaign, "so they did extend the rebuttal beyond income and payroll."

Government and private research has found that smoking rates are higher among people of low income.

A Gallup survey of 75,000 people last year fleshed out that conclusion. It found that 34 percent of respondents earning $6,000 to $12,000 were smokers, and the smoking rate consistently declined among people of higher income. Only 13 percent of people earning $90,000 or more were smokers.

When looking for extra tax dollars, federal or state governments often turn to the one in five Americans who smoke, and many states already hit tobacco users this year. So did the tobacco companies, which raised the price on many brands by more than 70 cents a pack.

The latest increase in the federal tax is by far the largest since its introduction in 1951, when it was 8 cents a pack. It has gone up six times since, each time by no more than a dime, until now.

Apart from the tax haul, public health advocates argue that squeezing smokers will help some to quit and persuade young people not to start.

But it was a debate the country didn't have in a presidential campaign that swore off higher taxation.


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Comments

Charles Dudley Jr April 2, 2009 | 6:09 a.m.

It is a fair trade off no matter how you look at it.

The money collected is going right back into the national health care system.

Where else do people think that needed money would come from?

People will quit which means over the long haul less health care related risks for those who do stop smoking which means if at all possible the own personal medical insurance and other insurances they pay could go down too.

It is a fair trade off if you look at the bigger and long term picture.

(Report Comment)
Lauren Hughes April 2, 2009 | 9:22 a.m.

Not everyone who makes less than $250,000 smokes or uses tobacco. And, if those people who do use it choose to spend their money on it, despite financial problems, that is their choice.

A sin tax on tobacco is hardly the same thing as raising income tax, which everyone pays. Not to mention, the revenue is going to fund health care programs for children.

(Report Comment)
James Herring April 2, 2009 | 9:56 a.m.

I am not a smoker. Have never smoked, and don't really like being around it. I like eating in a non-smoking restaurant. BUT, raising taxes by this ridiculous amount on tobacco products, in my opinion, is nuts. The argument for it rages as much as the argument that global warming isn't real. If people want to smoke, let them. And like in Columbia and other places, let the people vote on whether they want it inside restaurants and bars. Let’s see, they tax tobacco, what’s next liquor? Why not? It leads to problems with the liver, drunk driving, doing stupid things. If you tax it, then less people will drink. Oh wait, we tried outlawing it and it didn't stop. Dem or Rep; this is wrong. Raise a tax, fine. .10 or .20. This is ridiculous.

(Report Comment)
Anton Berkovich April 2, 2009 | 10:16 a.m.

Charles, should any location that has handicapped access charge higher prices or admission prices to just those people who use them? It's just transferring money from those people to the facilities they only use. Seems like a fair trade to me.

(Report Comment)
Charles Dudley Jr April 2, 2009 | 7:05 p.m.

Fart Anyoleday it is a totally different theology and priority but then again you are obviously one of those who still cannot see the forest through the trees.

(Report Comment)
John Schultz April 2, 2009 | 9:33 p.m.

Yet another inspirational post from Chuck, keeping it real (but not classy) from Paquin Tower!

(Report Comment)
Charles Dudley Jr April 3, 2009 | 2:44 a.m.

John Schultz chairman of the Libertarian Party of Boone County once again getting in his little snippets.

http://www.youtube.com/watch?gl=GB&h...

What Took you so long to post?

(Report Comment)
John Schultz April 3, 2009 | 7:38 a.m.

Chuck, you should know by now that I don't bother to watch your or Ray's little YouTube "snippets" - if you have something to bring to the discussion, please just type it.

(Report Comment)
Charles Dudley Jr April 3, 2009 | 8:00 p.m.

John Schultz chairman of the Libertarian Party of Boone County once again getting in his little snippets and contributed absolutely zero.
------------------------------------------------
Nicotine may have more profound impact than previously thought

Conversely, the data could also help scientists develop better treatments for various diseases. Pharmaceutical companies rely on basic research to identify new cellular interactions that can, in turn, serve as targets for potential new drugs.

"It opens several new lines of investigation," said lead author Edward Hawrot, professor of molecular science, molecular pharmacology, physiology and biotechnology at Brown University.

Source and More:
http://www.physorg.com/news157987668.htm...

(Report Comment)
John Schultz April 3, 2009 | 10:51 p.m.

But Chuck, did you really contribute anything by posting this? Because at the end of the article it reads:

"To conduct their study, Hawrot's lab looked at mice genetically engineered by other researchers to lack the alpha-7 nicotinic acetylcholine receptor. Those mice were compared with normal mice, so the difference in receptor-associated proteins could be highlighted."

But just a couple days ago in the raw milk discussion you claimed:

"Often times your studies are only of one or a select group of people and not of a major portion of the populous either there Mark.

<snip>

Studies do not encompass all but only select groups of "control subjects" which usually is a very minor portion of any population center."

So can you explain why we should trust the study you posted to this story but not those that Mark and Christopher Foote posted in the other thread? I am really puzzled here, please help us out!

(Report Comment)
Charles Dudley Jr April 4, 2009 | 3:53 a.m.
This comment has been removed.
jasen heffner April 17, 2009 | 9:23 a.m.

First and foremost. it's not your call to make anyone quit smoking. I personally dont care how unhealthy you may think it is.. FREE COUNTRY USED TO MEAN SOMETHING. how about since i disagree with ppl who waste money on a 4$ cup of coffee. maybe that should move up to 10 $. since you (unlike smokers) have the option to make it at home for a fraction of that cost. smoking is a mostly low income issue. so by raising the prce. it makes more stress on the people who work hardest for thier money. andmore stress means ppl will probly smoke more.
But no matter what your opinion. you cant stand there and say" good maybe it will make them stop smoking" who are you to try to make our lives harder bc you dont like a personal choice i made. you have no right. andone who disagrees should go right now and spit on all those old documents our forefathers sat down and wrote, bc thats basically what your doing. have a good day passing your judgments!

(Report Comment)
Tim Cox September 5, 2009 | 8:43 a.m.

For all you communists that want to get all the smoke out of your dainty little nose holes. this didnt only affect smokers, but also those of us who use smokeless tobacco, my habit has no effect on you and now my snuff is up over 4 dollars a can. this is fricken stupid. americans cant even enjoy the small things in life anymore. i really hope that someone has a rebellion because i am fighting mad and i dont think we should take this bullcrap anymore. IT IS TIME WE TAKE OUR COUNTRY BACK.........................................

(Report Comment)
Nita Metcalf January 10, 2010 | 7:50 a.m.

The point of the article is that Obama made promises in the campaign about NOT taxing those of income of less than $250,000; it was NOT on the benefits of the tax - no matter what the benefit may be.

(Report Comment)

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