Want Less of Something? Tax It

I never thought I would find myself agreeing with public health activists who push for cigarette taxation as the most effective tool to reduce smoking. But they got one thing right: taxing something means you get less of it. That rule also applies to work, investment, capital formation, etc. A WSJ editorial [sub only] today shrewdly observes that and the folly of proposing new government programs that rely on funding generated by higher cigarette taxes:

Cigarettes have become every pol's favorite tax target, and last year Trenton raised its cigarette tax to $2.575 per pack -- the highest state levy in the nation. Governor Jon Corzine forecast that the tax increase of 17.5 cents a pack would fetch $30 million in revenue to help balance the state's $1 billion deficit. Not quite. A new analysis by the Center for Policy Research of New Jersey finds that the state collected $23 million less revenue from tobacco taxes in Fiscal 2007 than it did the year before.

Anti-smoking and health advocates say this proves that high taxes on cigarettes reduce smoking. And they're partly right: When you tax something, you get less of it. If only politicians kept that in mind when they were taxing work, investment and saving -- as opposed to "sin."...

State cigarette tax collections may fall by an estimated $1 billion more if Congress goes ahead with its plan to raise the federal cigarette tax to $1 a pack from 39 cents in the name of funding an expansion in health-care spending of $132.6 billion. The Heritage Foundation calculates that, to make those numbers add up, some 22 million Americans would have to start smoking over the next decade.

So, light up, friends. You may kill yourself, but your bad habits will let the politicians continue theirs.

It is pretty ironic that more and more government programs rely on the fact that people smoke. What if everyone quit? Well, that might be the only great anti-smoking argument: to pull the rug out from underneath the Nanny/Welfare State.