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The Honorable Max Baucus
Washington, DC 20510
The Honorable Charles Grassley
Washington, DC 20510
On behalf of the millions of taxpayers, small businesses, families, senior citizens and
shareholders, we strongly urge you to work and vote against any tobacco tax increase for reauthorization of the State Children’s Health Insurance Program (S-CHIP).
In general, S-CHIP is a misguided attempt to address health insurance for children. Instead of morphing the program into a universal entitlement, we the undersigned, urge you to seek free market reforms to empower low-income working families and strengthen access to private health care coverage. As 70 percent of the uninsured children in this country already qualify for Medicaid or S-CHIP, an expansion of the program is the wrong direction.
As the reauthorization debate continues we urge you to work and vote against all efforts to raise the tobacco tax to fund the swelling program. Taxpayers in many states are already facing higher taxes to fund state health care program expansions. Rather than joining states in taking more money from taxpayers to fund misguided priorities, it is crucial that Congress lead the way toward consumer driven health care policy.
Raising the tobacco tax to fund S-CHIP creates a lose-lose situation. A higher tax rate will not only scapegoat a segment of Americans for using a legal product, but will also hurt small businesses which often lean on tobacco sales to stay in business. As small businesses are the engine of job creation in the U.S., raising the tax on tobacco is destroying jobs.
In order to avoid paying higher and higher tobacco taxes, consumers will turn to the Internet or out-of-state sources for tobacco products. In fact, tax increases have led to an increase in illegal activities and smuggling. With an increase in illegal activities comes an increase in the cost of enforcing compliance.
The very reasoning behind tobacco tax increases is flawed. Proponents argue the
government can have increased revenue and less tobacco use. It is absurd to argue that a tax increase will diminish the number of people buying tobacco and that it will increase tax revenues. Funding an expansion of children’s health insurance on an already-declining revenue stream that the legislation seeks to further decrease is dangerous policy.
Once again we, the undersigned groups, urge you to work and vote against raising the federal excise tax on tobacco for reauthorization of S-CHIP.
President, 60 Plus Association
President & CEO, Small Business and Entrepreneurship Council
President, National Taxpayers Union
President, Americans for Tax Reform
President, Americans for Prosperity
Thomas A. Schatz
President, Council for Citizens Against Government Waste
President, Center for Individual Freedom
Executive Director, American Shareholders Association