Huffpost Business

The Problem With Taxing Cigarettes: Everyone Lives Longer!

Posted: Updated:
CIGARETTE TAX PROBLEM
AP | AP

If ever there was something that worked too well, the cigarette tax might be it.

A new study published by the Congressional Budget Office shows that any additional money the state obtains by raising cigarette taxes will eventually be outweighed by the increased use of entitlement programs such as Medicare or Social Security. In other words, a healthier population lives longer and uses more of the government's money. (h/t The Washington Post)

The CBO states:

"After about 50 years, the increases in spending for Medicare, Social Security, and other, smaller mandatory programs stemming from increased longevity would exceed the combination of sav- ings for Medicaid and other programs and additional rev- enues stemming from better health, greater productivity, and more time spent in the labor force. By 2085, those health effects would have the net result of increasing the deficit by 0.003 percent of GDP."

Of course, the study does state that raising cigarette taxes will decrease the federal deficit ever so slightly over the first 75 years. After that, a too-healthy population will begin to weigh on the government coffers. The study also determined that the government would benefit from what would likely be a healthier and more efficient workforce.

Today, cigarette taxes vary from state to state. They are as low as .17 cents per pack in Missouri and as high as $4.35 per pack in New York, according to Campaign For Tobacco Free Kids. In 2009, the Federal government raised the national cigarette tax 62 cents to $1.01, the American Lung Association reported.

Were taxes on cigarettes to be raised, it would only affect what the OECD estimates to be the 15 percent of Americans that are daily smokers.

Around the Web

California tobacco tax narrowly rejected by voters

California voters narrowly reject new tobacco tax

Illinois Raises Cigarette Taxes to Ease Medicaid Cost Strain

Tobacco tax dispute in halted in hearing

Quinn to sign Medicaid cuts, cigarette tax hike

Shop Owner Fumes Over Impending Tobacco Tax Increase

Feud on sin tax still rages in House

Alcohol and Tobacco Tax and Trade Bureau Annual Report Highlights Benefits ...