Is this the most regressive tax in America?

My mother lives in a very nice retirement community.  Typically for an affluent suburb, the residents are rich and white, while the employees are low-income and represent a variety of races (white, Asian, black, and Hispanic).  They’re not downtrodden employees.  Many have been there for decades and have strong bonds with the elderly in their care.  But they’re definitely not middle or upper class.  Economically, they’re working or lower class.

Man smoking

Here’s another broad statement I can make about the community in which my mother lives:  Almost none of the affluent residents smoke cigarettes, while a high percentage of the poorer employees smoke.  I know that my statement about the employees is true because I’m there often and I always see a rotating crop of employees hunkered down in the garage or standing out on the streets smoking.

I have to admit here to hating cigarettes.  (And yes, I know that “hate” is a very strong word.)  I have an unusually sensitive sense of smell, and cigarettes are very high on my list of unpleasant odors.  Just to give you an idea how much I hate the smell, back in the early 1980s, when I’d return to my flat in England after a night of dancing (not drinking, just dancing), I was so repulsed by the cigarette smell that clung to me that I’d instantly take a shower.  This doesn’t sound like a big deal until you realize that I was doing this between November and March, when the flat had no hot water after 10 p.m., and the shower water was probably just above freezing.  I hate cold water, but I hate the smell of cigarettes even more.

My loathing for cigarettes means that I’ve always had two thoughts when I’ve seen the employees puffing away.  My first thought is, “God, I hate that smell.”  My second thought, always, is “They must be spending a huge percentage of their income to support that habit.”

Cigarette pack

Today, my thoughts went one step further.  Yes, they are spending a huge percent of their income, but they’re not actually spending it on the cigarette.  Instead, they’re spending it on the taxes for that cigarette.  Here in California, cigarettes are taxed at a very high rate:

Cigarettes are subject to both the cigarette tax and the cigarette and tobacco products surtax. The tax and surtax are paid by distributors through the use of tax stamps, which are purchased from the Board of Equalization (BOE) and affixed to each package of cigarettes before distribution. The cost of the stamp includes both the cigarette tax and the surtax. Currently, each stamp costs 87 cents per pack of 20 cigarettes, comprising 12 cents for the cigarette tax and 75 cents for the combined surtax.

Tobacco products, not including cigarettes, are subject only to the cigarette and tobacco products surtax. Tobacco products include all forms of cigars, smoking tobacco, chewing tobacco, and snuff, as well as other products containing at least 50 percent tobacco. Effective July 1, 2011, through June 30, 2012, the rate is 31.73 percent.

I don’t know whether the consumer has to pay the usual county sales tax on top of all those state taxes, but I assume he (or she) does.  If that assumption is correct, you can add on an additional 8% or so to every cigarette pack sold in California, depending on the sales tax rate.

Shake down for money

This is a staggeringly high tax rate.  Worse than that, it’s a hugely regressive tax rate, meaning that it falls most heavily on those who can least afford it.  The regression is hidden, because it looks as if everyone who purchases cigarettes, rich or poor, pays the same “sin” tax for the product.  In fact, though, rich people in California have mostly given up on smoking.  This particular sin tax is passing them right by.  Poor people, whether they smoke because of peer pressure to smoke, or because they’re immune to government pressure to quit smoking, or because it’s a real pleasure in a life too financially constrained to have many pleasures, end up paying that tax.  Worse, because the government relies on this sin tax to fund health programs and education, as people quit, they keep raising the tax to stabilize revenue.

I hate cigarettes.  What I hate even more, though, is a government that funds itself by using regressive taxes.  It’s a sleazy practice.  How much better, of course, if we would fall back on a non-religious version of tithing, as Dr. Carson so gracefully suggested in the speech he gave before a manifestly bored and uncomfortable President Obama.

Be Sociable, Share!

Comments

  1. Mike Devx says

    To me, it’s just one example of using taxation as social policy.  “Sin taxes” are taxes covering undesirable but legal behavior, and state and national legislatures tend to treat sin taxes as a separate category from other taxes.
     

  2. Oldflyer says

    As a reformed smoker for over 20 years, I have no stake in the game.  Still, I hate the hypocrisy.
    Even as the politicians and “public Nannies” rant about the evils of smoking, they keep the activity legal so that they can tax  the smokers unmercifully.

  3. shirleyelizabeth says

    When I started traveling I learned that countries (and states even) have different smells (an obvious thing, but something you don’t think about if you stay in one place). Mexico smells like crap. You have to get into the ocean and under the water before you’re free of it. The Western and Northern European countries smell like smoke. I don’t think there’s any way to escape it.
     
    What gets me is that ObamaCare is said to leverage hefty taxes against those who smoke. I had thought they had been paying in their share for years with what we’ve been taking from them.
     
    (Aside from my beloved Arizona – which has a smell I can’t place since it’s home base – California has to have my favorite smell (at the right time, of course). In the morning before it gets too smoggy the air is so wet and full and…planty.)

Trackbacks

Leave a Reply