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The Big Picture
This week, the House of Representatives wrapped up its committee activity on the massive $3.5 trillion budget reconciliation package. The bill is flooded with Green New Deal policies, cradle-to-grave welfare programs, and an unsustainable expansion of entitlement programs like Medicare.
Democrats argue that a big part of this legislation is going to be paid for, as if this somehow makes their efforts fiscally responsible. The reality is that the American people ultimately pay the price to expand the social welfare state.
For example, the democrats are going after consumers of tobacco products by raising taxes on cigarettes. Their goal, of course, is not to discourage tobacco consumption, but to pay for their socialist plan. According to the Joint Committee on Taxation, this tax hike would raise nearly $100 billion to pay for duplicate and unnecessary federal government programs.
Democrats on the Ways and Means Committee passed their piece of the reconciliation package which included a provision to increase taxes on cigars, cigarettes, and vaping products.
Tax Foundation analysts estimate that this tax hike on cigarettes would cause lower- and middle-income Americans to pay $1 more per pack. And this does not include the already-high excise taxes that some states and localities have on tobacco products.
Why it Matters
President Biden has promised that his Build Back Better Act would not raise taxes on low-income families and individuals. This increase in the tobacco tax is, however, highly regressive. According to the CDC, one in five adults with an annual income of less than $35,000 is a smoker. This tax increase will hit them particularly hard.
The tax hikes being proposed by the Democrats are not about reducing or discouraging smoking but about ways to pay for their spending spree. Democrats will use moral arguments and that this tax policy change is for public health reasons; however, the unintended consequences are much worse.
Soda taxes have been implemented in several localities across the country and to this day Americans continue consuming soda without regard for the higher prices. The same can be said about tobacco. Additionally, higher cigarette prices will lead to an increase in black market sales. For individuals who value freedom, coercing Americans to change certain habits through taxation is a governmental action that we must oppose.