Is it right to raise the tax on cigarettes? You bet!


Congressional Democrats looking to spend an additional $35 billion on health coverage for children are drawing criticism for the method they've selected for funding the program: An increased tax on cigarettes. The program would increase the tax from 39 cents per pack all the way up to $1.

Given that smoking is more common among lower-income Americans, the tax is seen as regressive: Health coverage for children will come out of the pockets of those who can't afford it.
Democrats argue that the tax may, in the long run, discourage people from smoking. I was skeptical about that at first -- There are tons of reasons not to smoke, an additional 61-cent tax per pack seems unlikely to sway anyone who's been unmoved by the average cost of $4.50 per pack before the proposed tax increase. Oh and, incidentally, smoking causes cancer and makes you smell bad.

But apparently Philip Morris (NYSE: MO) thinks otherwise. According to the Associated Press, "Bill Phelps, spokesman for Philip Morris USA, based in Richmond, Va., said a steep federal tax increase could accelerate the national decline in smoking to the point that the insurance would have to find other revenue sources."

And wouldn't that be wonderful! If an increased tax of 61 cents per pack is enough to accelerate the national decline in smoking, then we should go for it: regressive tax or not. If someone can afford to spend $4.50 per pack, they will not be cast into the poorhouse by an additional tax of 61 cents to provide health care for underprivileged children.

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