Brand New Federal Vaping Tax Finds its Way into Democrats’ $3.5 Trillion Spending Bill

The Big Picture

Democrats are racing to the finish line to pass their reckless partisan $3.5 trillion socialist spending bill. The bill has been debated behind closed doors for months as Democrats keep the public in the dark for as long as possible. And while President Biden’s approval rating hovers just above 40% in an economy that is struggling to grow, Democrats are determined to push their agenda, no matter the cost.

To pay for these completely ridiculous and outrageous programs, Democrats need to find money somewhere. How about breaking a campaign promise? Despite repeatedly promising not to raise taxes on anyone making under $400,000 a year, the brand new federal tax on vaping products does just that. And to make matters worse, the vaping tax would undercut the public health goal of getting smokers to quit by making vapes much more expensive.

The Details

  • Today, there is no federal tax on vaping products.
  • The FDA recently approved eight smokeless tobacco products with a modified risk claim, concluding that completely switching from cigarettes to these products lowers certain health risks. Tax policy should be encouraging this switch to promote public health, not discouraging it by increasing the price of vapes.
  • Under the bill, vaping products are taxed at a rate of $100.66 per 1,810 mg of nicotine. That equals a federal tax on a regular pod-based product of roughly $2.25 per pod.
  • Vaping products fall under the umbrella of noncombustible tobacco products. This means the product uses an e-liquid that might contain nicotine. Because the device has an electronic heat source, the device heats the aerosol that the user inhales.
  • Cigarettes, cigars, and pipes fall under the umbrella of combustible tobacco products. Cigarettes are tube-shaped tobacco products made of tobacco leaves wrapped in thin paper. The user lights the tip of the cigarette to burn the tobacco and inhales the smoke through the unlit end.
  • Excise taxes, like the one here, always fall the hardest on those with the lowest incomes.
  • One of President Biden’s strongest campaign promises was that there would be no new taxes for those making less than $400,000.

Why It Matters

With this brand-new federal tax on cigarettes and vaping products, President Biden and Democrats are breaking one of their most important campaign promises. That campaign promise was not solely tied to income, it was a blanket promise that no one making under $400,000 would see any tax increases. According to the Center for Disease Control (CDC), there are higher rates of smoking with individuals below the poverty line and in lower socio-economic statuses than the general population. Therefore, this new tax will in fact raise taxes on those making less than $400,000.

The Democrats’ plan to tax vaping products on the same level as cigarettes is also completely nonsensical and will harm public health. Noncombustible tobacco products like vaping and e-cigarettes are not as harmful as cigarettes and other combustible tobacco products. One study concluded that e-cigarettes are 95% less harmful than smoking. That study also found that many e-cigarette users are former smokers who use e-cigarettes to get them off smoking because of the lower health risks. This finding was also recently endorsed by the FDA. Government policy should aim to encourage smokers to switch to e-cigarettes if they can’t quit smoking, not discourage the switch by making vapes as expensive as cigarettes.

In 2019, the CDC reported there were 50 million tobacco users in the United States, and 80% of respondents said they used combustible products like cigarettes. The government has a real opportunity to incentivize cigarette users to move to a safer product like e-cigarettes or vaping. However, this bill treats all users exactly the same. Other studies have concluded that a tax on vaping products will lead to an increase in youth and adult tobacco use.

The flurry of new tobacco taxes in this bill are estimated to provide almost $100 billion in revenue. But, besides the fact the Democrats are taxing the lowest earning individuals in the United States to pay for their reckless spending programs, the tax base is not a reliable one because smoking is declining in the United States. Moreover, tobacco taxes can become so burdensome that a black market is created, which is already the case in states with high tobacco excise taxes.

The Democrats’ proposal to create a federal tax on vaping products should be defeated. It undercuts public health policy by treating vaping products just like cigarettes, it will not generate the revenue Democrats claim it will, and it breaks President Biden’s core campaign promise to not raise taxes on anyone making less than $400,000.