Sin Taxes
In California this primary, we are being asked to vote on a $1 per pack cigarette tax. My inclination, of course, is to vote no. But I thought I'd check: Are there any conservative arguments in favor of sin taxes?
Here are the basic arguments against, some cribbed from plausible (if occasionally unsourced) arguments on Wikipedia, others cribbed from Curtis Dubay of the Heritage Foundation:
- Sin taxes can trigger black markets (saw this personally when I lived under the British cigarette tax).
- Sin taxes are regressive, taking money from the poor (and sending it, in some cases, to treatment programs that one suspects are usually used by the middle class).
- Sin taxes do not, on balance, discourage unhealthy behavior; raising alcohol prices might push teen drinkers towards pot, and raising cigarette prices pushes smokers to high-tar cigs.
- Sin taxes raise less revenue than anticipated, as they target activities that are declining in popularity (and see also the black markets above). Thus, sin taxes will increase the deficit.
- Sin taxes are coercive attempts to regulate individual decisions about legal behaviors.
Conservative arguments in favor? Well, in The Wealth of Nations, Adam Smith approvingly cites Britain's use of alcohol taxes to curb lower-class drinking.
I'd say on balance the no's have it--or do any Ricocheteers know of other conservative arguments in favor of sin taxes?
UPDATE: Libertarian arguments are fine too; sorry if I seemed to be trying to exclude those.
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Aug '11
Re: Sin Taxes
To be specific, you are asking for conservative arguments and not libertarian. The libertarian argument is decidedly against sin taxes.
If enacted, the CA tax will be decidedly higher than NV and that will lead to a black market. See NY and its $4.35 tax as compared to surrounding states.
Nov '10
Re: Sin Taxes
Well, they also say that whatever you subsidize you get more of (which is why expanding the welfare system doesn't reduce poverty but increases it) and whatever you tax you get less of (which is why taxing job creators kills jobs). But this seems only to be true for certain classes of things, and it depends on what you mean by "more" and "less" in the two respective cases, and precisely what you subsidize or tax. Subsidizing education can create more people who go to school but can effectively weaken higher education because the system is flooded with weak students who have an enormous entitlement mentality and no work ethic. Taxing investments just cause investors to move their money elsewhere. It may increase their investments overseas, which isn't objectively "reducing investments", just moving it elsewhere, and generally undesirably so. Similarly with the examples you give for sin taxes.
I agree with Charlie that "conservative" and "libertarian" give quite different takes on this, as do "social" versus "fiscal" conservatives. I'm of the view that you can't legislate morality, though I am a moralist myself.
Oct '10
Re: Sin Taxes
In a state with a leviathan government, any tax is simply one more spoon full of sustenance for the government. All taxes are regressive since they take from a free citizen that which is his. Our "social compact" began with the basis that taxes were to support the necessary functions of a consensual government.
Sin taxes worked to some degree when communities were isolated by distance and slowness of travel. Today they simply perform the function of diverting the commerce of free people into black markets and further weakening any moral claim the government has.
Sales taxes, or consumption taxes if you prefer the term, equally applied to all commodities or finished goods, without discrimination, maintains that moral foundation.
For dealing with the poor, there once was the idea that sales taxes would not apply to the most basic of goods. Food and medications were not taxed. After that, charity would take up the slack. We lack charity because we are no longer witness to actual want, since the state has preempted the individual and voluntary association from charity.
As for sin taxes, sin has it's own reward, and in a free nation, lacking government welfare, it is enough.
Mar '11
Re: Sin Taxes
I'm ok with sin taxes so long as they replace some other tax. Better to tax cigarettes than income. But to add a cig tax on top of income tax is no good.
Sep '10
Re: Sin Taxes
One more reason against sin taxes: Over time, the government becomes dependent on revenues generated from "sin" and is perversely incentivised to perpetuate it. See legalized gambling.
Jul '11
Re: Sin Taxes
No more new taxes for any reason. They can always come up with a good reason to waste our money. Enough is enough.
Dec '11
Re: Sin Taxes
Sin taxes make perfect sense in the following context. Smoking results in increased number of fires. Regardless of whether we hold the careless smoker responsible for their damage, the local community has some increased costs for fire protection caused by smokers. To the extent that these costs can be approximated, there is nothing wrong with levying a tax on a private activity high enough to cover additional public expense.
The amount of tax necessary to cover these costs is probably very small by current standards. I believe that in the late 1980s, I saw a study that showed that tobacco taxes at that time did cover the extra social costs. That was when cigarette taxes were a fraction of what they are today.
Dec '10
Re: Sin Taxes
It's yet another leftist, self defeating concept. If sin taxes worked as intended (to modify behavior), they would cause their own cessation. Government, however, has come to rely on the revenue produced by these taxes and actually needs the errant behavior to continue and even increase.
On a personal note, why the [expletive][expletive][expletive] must pipe tobacco be taxed at 95% in my state? It's a very niche market and cannot possibly produce adequate revenue. Of all the types of tobacco to attack this one is the least harmful to health.
Re: Sin Taxes
In California, are there any taxes on "medical" marijuana? Or is smoking dope less sinful than imbibing whiskey?
Dec '11
Re: Sin Taxes
That's exactly right. Speaking of another leviathan state... Michael Bloomberg's enthusiasm for raising taxes on cigarettes, banning saturated fats and now targeting soda (!) for a punitive tax leaves one wondering where it all shall end.
Dec '11
Re: Sin Taxes
Taxes should be used exclusively for raising revenue, not social engineering.
Apr '11
Re: Sin Taxes
Charles Rapp: To be specific, you are asking for conservative arguments and not libertarian. The libertarian argument is decidedly against sin taxes.
If enacted, the CA tax will be decidedly higher than NV and that will lead to a black market. See NY and its $4.35 tax as compared to surrounding states. · 16 hours ago
I don't think that this is true. Libertarians often have places for sin taxes, since if the "sin" is a source of state revenue, the state will not pursue bans with such enthusiasm. The "better than banning it or nationalizing it" argument appears, for example, in the argument for lottery taxes in Libertarianism from A to Z by Jeffrey Miron, senior fellow at the Cato Institute.
Oct '10
Re: Sin Taxes
Muleskinner: Sin taxes make perfect sense in the following context. Smoking results in increased number of fires. Regardless of whether we hold the careless smoker responsible for their damage, the local community has some increased costs for fire protection caused by smokers. To the extent that these costs can be approximated, there is nothing wrong with levying a tax on a private activity high enough to cover additional public expense.
The amount of tax necessary to cover these costs is probably very small by current standards. I believe that in the late 1980s, I saw a study that showed that tobacco taxes at that time did cover the extra social costs. That was when cigarette taxes were a fraction of what they are today. · 4 hours ago
The issue here isn't tobacco, it is human carelessness. For what reason do you conclude that all smokers are responsible for those who are careless. Perhaps the fire department should levy a charge for fires started by careless people and leave responsible citizens alone.
The above is true for any irresponsible act. The "community" owes nothing for the stupidity of a few.
Except under the progressive paradigm. Socialism to the core.
May '10
Re: Sin Taxes
Starve the beast. Fight tax increases of any kind. It isn't the tax level, it's the spending level.
Jun '10
Re: Sin Taxes
The California cigarette tax (Prop 29) is supposed to "raise about $735 million annually, most of which would go toward cancer research." Right.
Why is it that these things are always supposed to raise money for health research? And why can't these geniuses ever figure out that regressive taxes bring in declining revenues? Where's the money supposed to come from when the well dries up? This is exactly what happened with S-CHIP. Remember that? It's killing our states, and it's the model for this latest bit of idiocy out of California.
Jan '11
Re: Sin Taxes
How much is the abortion tax?
Dec '11
Re: Sin Taxes
raycon
The issue here isn't tobacco, it is human carelessness. For what reason do you conclude that all smokers are responsible for those who are careless. Perhaps the fire department should levy a charge for fires started by careless people and leave responsible citizens alone.
The above is true for any irresponsible act. The "community" owes nothing for the stupidity of a few.
Except under the progressive paradigm. Socialism to the core. · 2 hours ago
It is not socialism in any sense. There are spillover effects from all kinds of private activities. If you can reasonably internalize at least some of those costs by a tax that covers the reasonable costs of the spillover damage, you do not ask me to bear the cost of your activity that affects me. In my example, smokers pay for the extra fireman.
We might need to agree on a definition of "sin tax." I'm taking tobacco taxes as a particular case, to the extent that it can be considered a Pigovian tax, a tax imposed to cover the spillover costs. If we are talking about a tax imposed as an alternative to prohibition, I'm with you.
Apr '12
Re: Sin Taxes
In my opinion no - some will suggest that the tax should be imposed to balance out negative externalities. However, that would assume the government will make some positive use of the money collected. With the current size of government, >95% of the revenue will from the tax will go to destructive ends. These destructive government activities far outweight any negative costs smoking imposes on society.
I believe this also extends to hard drugs, as criminalization of them is (practically speaking) a very heavy tax on usage; except in this case everyone else is also taxed to finance the war on drugs.
There are other methods of affecting change in society rather than government . Start a charity geared toward anti-street drug education; or whatever cause you're interested in.
Edited on April 29, 2012 at 6:10amOct '10
Re: Sin Taxes
Thanks, all, for your comments so far. Sounds like there's a case for a Pigovian tax based on fire, but not one based on smoke.
The OP could have given a better indication of what the tax proposed to fund. Thanks, Casey, for adding that link.
Aug '11
Re: Sin Taxes
Just for the record Adam Smith doesn't use the phrase "sin tax." He calls them luxuries. Taxes on necessities, according to Smith, are inflationary. They take more money out of the economy than the government gets, and they inflate wages and prices. Taxes on what he calls "luxuries" are not.
"It is otherwise with taxes upon what I call luxuries, even upon those of the poor. The rise in the price of the taxed commodities will not necessarily occasion any rise in the wages of labour. A tax upon tobacco, for example, though a luxury of the poor as well as of the rich, will not raise wages. Though it is taxed in England at three times, and in France at fifteen times its original price, those high duties seem to have no effect upon the wages of labour. (Wealth of Nations v.2.151)"
Alcohol fits this category but so does chocolate.