When is Sin Tax a Sin?

April 2, 2009 | 70 comments
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The new tobacco tax in the United States took effect yesterday, which tripled the amount of tax collected on each pack of cigarrettes, and probably raising the cost of a pack to as much as $9. The tax is the single largest increase in tobacco taxes in history.

For an LDS audience, this probably seems all fine and good. You aren’t likely to complain about a sin tax if you aren’t committing that sin. And, to be honest, its hard to imagine a sin tax that LDS Church members would be particularly vulnerable to (perhaps ice cream?)

But even if we aren’t vulnerable, isn’t there a limit to sin taxes?

Here in New York State last year, State Health Commissioner Dr. Richard Daines, who is also an LDS Church member, proposed a new sin tax in the state, one on sugar in carbonated beverages, in an attempt to improve health in the state. As might be expected, the tax proposal was quite controversial, but was eventually taken off the table due to political concerns. If we as Mormons support taxes on tobacco, then wouldn’t the same logic lead us to support another tax to make us healthier?

And if we should support that kind of sin tax, why not a tax on those who fail to exercise? Or a tax on cafeine? Or tea? Or, depending on how you interpret the Word of Wisdom, perhaps even a tax on meat, so that it is eaten “sparingly?”

One of the great things that sin taxes can do, except for the affects of addiction and compulsion, is limit the amount the poor use the product taxed. A hope behind any sin tax is that it will discourage bad behavior and improve the health and welfare of the population.

We could probably take this exercise in another political direction, also. There are already taxes on alcohol, as I understand it,  although perhaps they could be increased, if sin taxes are the way to go. So why not then taxes on drugs? Why not legalize marijuana and simply heavily tax it?

I ask because it seems clear that there should be some limits here. I think there is an economic limit to how well a sin tax can work — at some point the incentive to find ways around the tax becomes too great, and purchases are made outside of the tax jurisdiction or a black market arises.

But aside from those efforts, don’t sin taxes eventually raise other problems? Couldn’t they backfire morally — lead to worse sin, at least in some cases? Certainly there is even a limit to using taxes as a way to implement public policy.

Mormonism’s history has an element of trying to work for public policies that improve how well the world keeps morality — how much sin is avoided. So you would think that we would have an idea of what limits there should be on sin taxes. Morally aren’t sin taxes questionable, because they allow immoral activity to continue?

So, from a gospel viewpoint, what should the limit be? Is it even possible to say?

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70 Responses to When is Sin Tax a Sin?

  1. Ian M. Cook on April 2, 2009 at 12:33 pm

    You bring some interesting questions.

    Should “sin” products be taxed any more than other products? Having high taxes/raising taxes on this sort of thing is kind of like taking advantage of someones addiction, much like a drug dealer.

    As far as I know, the church won’t take tithing from gains from gambling, or lottery or other “sins” should we support the government gaining from those things?

    Boy, too many questions.

  2. James on April 2, 2009 at 12:48 pm

    The increase in tobacco taxes will just drive business to smoke shops, and their web sites, on indian reservations where state taxes are not collected. Even though the price will go up there too, that price will still be lower than in a non-reservation store.

  3. Mission Bay Runner on April 2, 2009 at 12:52 pm

    I’m a strong supporter of “sin” taxes and I say tax to the max.

    Many of those “sins” place a heavy financial burden on government and society. I.e. tobacco, alcohol, gambling, pronography – all contribute to society ills such as increase healthcare costs, insurance liabilities, dui, accidents, broken families, poverty, children on welfare, etc, etc. Even sins that are harmful to the enviroment should be considered.

    A well run sin tax uses the funds collected from that sin to help offset the associated financial burden. As a LDS that refrains many (if not all) of these societal sins, why should I have to bear the financial burden of others with my taxes and insurance rates increased?

  4. Liz Busby on April 2, 2009 at 12:57 pm

    Here’s a sin tax that would affect roughly 1/3 of the male population at BYU: http://www.thetowntalk.com/article/20090401/NEWS01/304010052

    Somehow, such a tax has never managed to pass. I like video games, but I’d support it.

  5. Mission Bay Runner on April 2, 2009 at 1:05 pm

    In the last year I’ve wondered if there should be a tax on video games, tv cable, radio or especially the internet, or any other public medium that could be exploited to promote immorality or violence or hate.

    I’ve heard that 80% of the US population would support a tax on pronography, but nobody can figure out how to implement. But a lot of states are now racing to tax sales over the internet to compensate for lost revenue from dwindling brick businesses.

    Have you considered an extreme example of a sin tax – i.e. illegal drugs? The government takes all cash proceeds, the product and throws you in jail and fines you. Some argue that is a powerful deterent and you need to get stupid people off the streets. Others say that only overfills the prisons and encourages even more violent activity.

  6. Jacob J on April 2, 2009 at 1:13 pm

    For an LDS audience, this probably seems all fine and good.

    Not for me. I think the rates at which we tax cigarettes is an abomination. I care a lot more about freedom than I do about the WoW.

    Mission Bay’s #3 cites a bunch of collateral damage to society, but the only one that seems to apply to cigarettes is healthcare costs. This is one reason I oppose government getting involved in healthcare, because once they do, they will inevitably feel they have the right, nay, the duty to tell me what to do every waking moment of my life. After all, if I smoke, what I eat, how much I exercise, when I go to bed at night, all affect my health. I’d just prefer to decide that stuff for myself rather than surrender my freedom to the state as Mission Bay Runner seems ready to do.

  7. dangermom on April 2, 2009 at 1:15 pm

    I don’t approve of sin taxes. If something is legal to use, the use shouldn’t be punished. I appreciate the argument of using the tax monies to pay for the expensive consequences of the ‘sin,’ and I can see levying small taxes to do that, but on the whole I’m against the idea.

    Half the sin taxes in California go to different causes anyway. I think the last cigarette tax was supposed to go to children’s education or something.

    And then there’s the issue of state-sponsored vice like lotteries–those are justified by the monies raised for good causes, right? The CA lottery is supposed to raise money for schools and everything would be wonderful, but that didn’t happen, of course.

  8. Mission Bay Runner on April 2, 2009 at 1:32 pm

    Jacob J – That is a very valid comment.

    Government already provides a lot of healthcare to the public to cover those that don’t qualify or can’t afford their own private healthcare.

    This group includes a lot of homeless drunks. They goto the public hospital a lot more often than I do. My own taxes would be lower if there were a higher tax on alcohol to pay for that hospital. If we could discourage them from getting drunk and related illnesses so often, we can downsize public hospitals.

    P.S. I don’t even use the public hospital anymore as my insurance requires me to use theirs.

  9. anon on April 2, 2009 at 1:32 pm

    ZERO!!!!

    To solve MissionBayRunner’s socialist concerns return government to its Constitutional levels by eliminating those programs. The purpose of government is to protect our rights, not to inflict the majority view on the minority. Dang control freaks!

  10. Mission Bay Runner on April 2, 2009 at 1:35 pm

    Dangermom -

    I live in California too and I think we will see a major tax revolt over the high taxes being placed on working families beginning with the reject of Props 1A-1E coming up here on May 19th and that are already trailing badly in the polls.

    I agree that the state leaders have badly mismanaged the state finances and would like to see the whole lot of them thrown out.

  11. Mission Bay Runner on April 2, 2009 at 1:39 pm

    Anon -

    Overall I agree with your constitutional view, but beware of one thing. On both the state and federal levels, the minority (special interest groups) have hijacked the government and are imposing their viewpoints on the majority (those of us who want less government interference in our lives.)

    But I take exception when people want to make lifestyle choices (“sins”) that places a burden on me and my family to accomodate their choices. And what about when their lifestyle choices inhibits or restricts my lifestyle choices?

  12. Dan on April 2, 2009 at 2:15 pm

    Prohibition failed to stem the drinking of alcohol, so the government figured the better way was simply to tax the drink. But taxing the drink, or the cigarette, or any other vice won’t stop people from committing the vice. Legalizing drugs and taxing them won’t change anything either, though most likely it will increase the amount of use. This kind of tax has a negative side effect. It overburdens the poor, who generally use vices as distractions from their otherwise sucky lives. Frankly, I prefer higher taxes on the rich, who can afford them, and still participate in vices as frequently as they want. :)

  13. Dan on April 2, 2009 at 2:17 pm

    Jacob,

    Not for me. I think the rates at which we tax cigarettes is an abomination. I care a lot more about freedom than I do about the WoW.

    Um, how exactly does this tax imperil your freedom?!?! Are you saying you are no longer free to choose for yourself to buy or not to buy a cigarette?

  14. T. Greer on April 2, 2009 at 2:38 pm

    Sin taxes are a classic case of the government exceeding its proper bounds of authority. If a substance or material is recognized as legal – i.e. its use and possession does not harm the liberties of others – then the government simply lacks the jurisdiction to place taxes on the product for any reason but the need for revenue. Matters of personal taste are not the matters of the state. Indeed, the Constitution of the United States (and all state constitutions, to my knowledge) gives the government no more authority to inhibit the legal sale of tobacco than it does to inhibit the legal sale of red-colored vehicles or houses with patios.

    @Mission Bay Runner-

    The exception you take is a strange one. If you truly find such actions inhibiting, then the rational course of action would be to make these “sins” illegal entirely. But before you endorse such a position, let us take the stance to its logical conclusion. Airplanes inhibit your ability to enjoy a nice quiet picnic in a park. Fatty foods result in higher health care costs for everyone, inhibiting your ability to spend your money as you will. 17-year old drivers restrict your freedom on the road, inhibiting, in the worst cases, your right to live.

    Do you suggest that we place an extra tax on airplane tickets, fatty foods, or gasoline?

    Using the government to force others to make lifestyle choices as you would see fit is social engineering- no more and no less. Do you wish to grant that power the “minority” you were disparaging before?

  15. Kent Larsen on April 2, 2009 at 3:01 pm

    Re #3 AND #5:

    pronography!!?? Really?

    Is that different from pornography??

    If we’re not careful someone will propose a sin tax on poor syntax!! (or at least on orthographic errors) [BIG GRIN]

    [Sorry, I couldn't resist the pun!]

  16. Geoff B on April 2, 2009 at 3:14 pm

    Kent, the biggest problem with sin taxes is it creates a government dependence on the tax to continue programs that are funded by the tax. The cigarette tax is justified, in part, to finance new health care for “poor” children. But what happens if fewer people smoke and sin tax receipts decrease? New sources of funding will be needed. So, in effect, the government is more addicted to the sin (cigarettes) than the people who smoke are.

    I can’t justify any sin tax for any reason. They are regressive (the poor pay the most in absolute terms and certainly as a percentage of their incomes) and they imply a nanny state we-know-better-than-you attitude by the promoters of the tax. I say abolish all sin taxes.

  17. Clayton on April 2, 2009 at 3:20 pm

    Amen Geoff B.

  18. Kent Larsen on April 2, 2009 at 3:22 pm

    Ian (#1):

    I think the answer to your question lies a lot in how you see government, as a lot of those who have replied since you did have hinted at. To what degree should government be involved in enforcing or influencing morality.

    I thin most people would agree that there is at least a minimal role for Government in morality — we have laws against killing, for example, and not just because it means a loss to others.

    But our society has also decided that government has no business in other areas of morality – such as fornication.

    In my opinion, government isn’t like a religion. It has to treat people from a realistic standpoint, not from an idealistic standpoint. Where a Church can, and should, expect its members to obey commandments, a government can not ignore that some people will act immorally, and should, therefore, seek laws that maximize whatever level of morality can be agreed on, while minimizing the cost of immorality to others.

    Prohibition is a good case in point. Trying to prohibit alcohol completely didn’t work — not only was it not successful to a large degree, it also encouraged other kinds of immorality — criminal organizations, violence, etc.

    A more realistic approach, taxing instead of prohibiting, didn’t eliminate alcohol, but largely eliminated the violence associated with liquor and forced criminal organizations into other fields (esp. drugs).

    I don’t know where the balance is, but I agree with you that it is a hard question.

  19. Jacob J on April 2, 2009 at 3:23 pm

    Dan,

    When the government takes my money it limits my freedom by removing my opportunity to decide what to spend that money on. Pretty simple. I am not an anarchist, so I am not opposed to taxes in principle. I believe a smaller government which takes less of my money maximizes the overall freedom in our nation.

    Mission Bay Runner #8,

    My own taxes would be lower if there were a higher tax on alcohol to pay for that hospital.

    Possible, but certainly not a lock. More money to the government from a different person does not automatically translate to them taking less of yours. But really, I think the whole approach of figuring out which policy benefits you personally is the wrong one. I prefer we pursue an approach that gives all people more control of their own destinies.

    Kent #15,

    People commonly spell it as pron or pronography to prevent it from showing up in searches and filters which look for the word spelled correctly.

  20. Sam B. on April 2, 2009 at 3:29 pm

    Geoff B.,
    Woohoo! I agree with you! The worst part about so-called sin taxes is that the government becomes hooked on a revenue stream that will diminish as the use goes up. Moreover, they tend to be extremely regressive.

    However, if the taxes were calibrated to take into account the negative externalities inherent in the act (and, of course, the revenue were used to fix or otherwise deal with the externalities), I’d have no problem with them. In that case, though, it wouldn’t necessarily be a sin tax. Ideally, the tax on tobacco would take into account the societal costs of tobacco, the tax on alcohol the societal costs of alcohol, the tax on gas the societal costs of driving, etc. I imagine it would be tough to calculate, though presumably it would be possible. The bigger concern, I think, would be dipping into those funds to pay for unrelated issues.

    Using taxes to pay for costs imposed by an activity but not fully internalized by that activity is not necessarily a bad thing, though. And that eliminates the concern about the tax diminishing–while the point is not to cause people to stop doing something, if fewer people were to do it as a result of the tax, the negative externalities would, presumably, diminish, and the same revenue stream wouldn’t be necessary to fix those externalities.

  21. SGarff on April 2, 2009 at 3:33 pm

    I think “sin taxes” are levied not so much as a way of prescribing behavior but because you can tax addictive substances highly with out really decreasing demand, much like gasoline. It would make little sense to have a blanket sales tax that was as high as the tax levied on tobacco because it is likely that people would buy less, hurting the economy and reducing the revenue you can generate. In short, the government imposes sin taxes because it can.

  22. Sam B. on April 2, 2009 at 3:40 pm

    And Jacob J.,
    It’s not entirely a liberty thing. If my actions are imposing a societal cost that I don’t fully internalize, I’m taking away other people’s ability to do what they will with their resources.
    Say, for example, I like to put up this crazy ugly Christmas display every year. It costs me $100 to put it up, and I love to do it, but my neighbors’ happiness (including property value, etc.) is diminished by $30 as a result of my display. I haven’t internalized those costs–it should cost me $130 to put up the display. In that case, it is fairer if the government imposes a $30 tax on my Christmas display and then distributes that money to my neighbors. At that point, I’m internalizing the full cost of my display. (I realize there are some problems, including the fact that there’s no guarantee that the government will use the $30 to compensate my neighbors rather than to fix the roads. Even still, I can’t complain, because I’m just being forced to internalize the full cost of what I’m doing.)

  23. dangermom on April 2, 2009 at 3:58 pm

    #21: “I think “sin taxes” are levied not so much as a way of prescribing behavior but because you can tax addictive substances highly with out really decreasing demand…”

    In CA at least, high cigarette taxes have contributed to a decrease in smoking. And also an increase in black-market purchases. Demand has gone down, though I don’t know by how much.

    I have to confess that I really like how little smoking I see these days. But I’m not happy with how we got here.

  24. Tehachapi Engineer on April 2, 2009 at 4:12 pm

    I went to lunch heard Dr Laura talk about this very subject to start her radio show. She is 100% all in favor of any device that deters bad behaviour.

    She recommend quite a few more sin taxes (Don’t ask me how to implement them):
    – A Divorce Tax
    – An Abortion Tax
    – Tax on sexual relations outside of marriage
    – Child Care Taxes instead of Credits – (She maintains that children are best nurtured by their parents instead of an institution.)
    – and a few others that I forget.

    The government has announced their research shows that the fiscal impact of the April 1st tax increase would motivate approximately 1 million smokers to kick the habit.

    A flip side of these sin taxes is the economic impact on production. If 1 million smokers quite, that is bound to put a lot of tobacco farmers out of business.

    They will either become dependent on government subsidies or they could be forced to grow wheat or corn (and help end world hunger.)

    I admit it – I’m selfish. I’m generally supportive of social engineering that increases my personal happiness and I strongly oppose any social engineering that makes my life more miserable.

    Personally (as someone who is alergic to tobacco smoke) I’m grateful that I live in a state with even tougher anti-smoking laws than Utah. I remember as a child going to foul smoke-filled restaurants.

    Today those have been totally eliminated

  25. anon on April 2, 2009 at 4:15 pm

    Mission Bay Runner says “But I take exception when people want to make lifestyle choices (”sins”) that places a burden on me and my family to accomodate their choices. And what about when their lifestyle choices inhibits or restricts my lifestyle choices?”

    If moral agent A does X (which harms you) when Q happens and moral agent B does Q, does your moral code allow you to penalize B for doing Q? Mine doesn’t – I’m only allowed to prevent A from harming me.

  26. Mark B. on April 2, 2009 at 4:18 pm

    What an interesting crowd you’ve drawn with this post, Kent.

    I’m glad that Sam B. showed up to give the intelligent economic argument: taxes that capture the societal costs imposed by the use of the taxed item are altogether appropriate, and, presumably, economically efficient as well.

    That doesn’t mean that government cannot or should not impose taxes at higher rates on those items, if the majority believes that discouraging their use will be good for us all. This does raise the concerns that Geoff B points out.

    Comments like this:

    I think “sin taxes” are levied not so much as a way of prescribing behavior but because you can tax addictive substances highly with out really decreasing demand, much like gasoline.

    ignore two facts:

    first, demand for gasoline is highly elastic–one need only look at the effect that last summer’s gas prices had on demand to realize that.

    second, high sin taxes do have a substantial effect at the entry level, deterring new smokers, for example. And, if we really believe that stopping people from becoming nicotine fiends in the first place is a worthwhile societal goal, what better place to affect behavior than at the entry point? Even for the “addicts,” though, higher prices have been shown to reduce consumption. Demand isn’t totally inelastic.

  27. MikeInWeHo on April 2, 2009 at 4:48 pm

    If I were in charge, we would tax fashion sins.

  28. Last Lemming on April 2, 2009 at 5:14 pm

    I’m fine with sin taxes as long as the proceeds are used to mitigate the social costs of the sin. That way, if the sin disappears, both the revenue stream and the need for the revenue stream dry up together and the government does not become dependent on it. This is sort of how it works with gasoline taxes. The proceeds are dedicated to the highway trust fund. If nobody drove, the government would collect no tax, but the highway trust fund would not need the revenue anyway. (It’s more complicated than that, but you get the idea.)

    Some states have dedicated portions of their tobacco taxes to budget categories where the social costs might show up (such as health care), but the direct link is missing. Sin taxes in general (and tobacco taxes in particular–don’t even think about raising the tax on beer) are used mostly as a source of general revenue. As such, they are a bad idea. But if there were a direct link between the revenue and mitigating the social costs of the sin, I would support taxing sugar, trans fats, or whatever.

  29. Jacob J on April 2, 2009 at 5:18 pm

    Sam B.,

    If my actions are imposing a societal cost that I don’t fully internalize, I’m taking away other people’s ability to do what they will with their resources.

    I totally agree with this. It is actually at the heart of what I am saying. The more ways in which the government tries to help in making my life better, the more societal costs are created where they wouldn’t necessarily be there otherwise. The societal cost of me smoking increases when the government decides to use everyones taxes to give me healthcare.

    As to your ugly Christmas lights, their effect on my happiness is not equivalent to you taking my money away, so although there is an analog between the examples, they differ in degree (considerably).

  30. Kent G. Budge on April 2, 2009 at 5:24 pm

    How about a stupidity tax?

    Oh, wait. We already have that. State lotteries.

  31. Sam B. on April 2, 2009 at 5:29 pm

    Jacob,
    I’m using “happiness” to cover the gamut of effects that my Christmas lights will cause you; that’s why I quantified the amount. The point is, my enjoyment of my Christmas display costs me less than the economic expense of that enjoyment. (In fact, my ugly Christmas lights may cause you economic harm–the fact that I annually put up the display may depress your property value if you are my neighbor.) That’s a cost I’m imposing on you, not internalizing myself, that gives you no benefit, and is therefore a negative externality.

    Mostly, though, my Christmas light example was to avoid arguing about the harm that alcohol, cigarettes, or whatever have on society. Substitute for Christmas display tax alcohol or gas or cigarette tax, or whatever other excise tax (because they’re not “sin taxes” in every case) you will. The whole point is, there’s not a good reason why I should only pay $100 for something that makes me happy if that thing actually has an economic cost of $30 that I’m making other people (who get no benefit from the activity) bear.

  32. Sam B. on April 2, 2009 at 5:31 pm

    (sorry–”if that thing actually has an economic cost of $130 that I’m making other people bear”)

  33. Dan on April 2, 2009 at 5:48 pm

    Jacob,

    #19,

    When the government takes my money it limits my freedom by removing my opportunity to decide what to spend that money on

    But the government doesn’t take your money BEFORE you make the decision whether to purchase that vice. It doesn’t limit a single freedom of yours. You can still choose to buy that vice or not. How much you pay for it is another question wholly, and not dependent on how free you are. That question is related to how much money you have. Now, if you are asserting that those with more money are freer to do things, well that’s another issue, isn’t it. Is freedom really defined by how many things you can purchase with money? No freedom is taken away with higher taxes on luxury items (luxury in this case meaning that those vices are not essential to your well being and health). You are not making your point.

  34. MikeInWeHo on April 2, 2009 at 6:41 pm

    re: 30
    Amen to that! I’ve always described the lottery as the Stupid Tax.

  35. jeff hoyt on April 2, 2009 at 7:31 pm

    I do not have a problem with “sin” taxes if the related activity truly has a net societal cost. Unfortunately, the truth gets obscured by government meddlers looking for more money (and the desire for more is endless). Take tobacco for example. Of course there are healthcare costs for people with lung cancer, but that is not the net cost to society as a whole. The overall costs are those specific healthcare costs minus the healthcare costs that would have been incurred for the twenty or so years the person would have lived had they not gotten lung cancer, less the social security benefits that would have been incurred, plus the taxes they might have paid on earnings during that time, less the costs of other social programs they availed, plus….. well, you get the picture.

    I have heard that tobacco net costs are negative, but have not researched to find out. May or may not be true, it doesn’t really matter. As others have pointed out the government is addicted to those taxes so they never go away whether or not their justification is bogus.

  36. Jacob J on April 2, 2009 at 10:14 pm

    Sam B,

    I understand your point about externalities. Obviously all externalities cannot be eliminated in the real world. To state my point once again, we create new externalities which didn’t previously exist with things like universal healthcare. We have already outlawed smoking in public places (in Oregon where I live you can’t smoke in bars!). When the government wants to provide healthcare it sounds great except that it means they can turn around and point out that this means they should be regulating everything which affects a person’s health. Over time this significantly chips away at liberty.

    Dan,

    I don’t even know where to begin. By your logic the state can take away nearly all my money and this does not affect my freedom. You obviously have a different view of freedom than our founding fathers.

  37. chads on April 2, 2009 at 10:43 pm

    I hope this isn’t a thread jack:

    As an emergency physician, I’m curious to know what those that think that the government has no role in healthcare think about emergency care.

    Should emergency departments be required by law to medically screen patients? If not, you might imagine the inconsistent, unreliable care that would be offered. If so, who pays for it?

  38. TMD on April 2, 2009 at 10:50 pm

    I think that sin taxes are often sinful. Particularly when they’re on things like regular cigarettes and common alcoholic beverages. Why? Because they’re highly regressive. And I think it’s very hard indeed to make a theological argument that a regressive tax is not sinful.

  39. Sam B. on April 2, 2009 at 10:51 pm

    Jacob J,
    That’s fine; on a broad level, I probably disagree, but I’m not addressing government provision of health care. What the government does with money raised is tangential to the issue of whether I’m internalizing the full cost of what I’m doing. You are right that all externalities cannot be eliminated in the real world, or at least that the cost of doing so would be out of proportion with the benefits. But I don’t see how that is an argument against eliminating targeted externalities. That is, just because I’m not going to cause people who drink to internalize all of the costs of their alcohol doesn’t strike me as a principled reason to decide, therefore, that I’m also not going to cause smokers to internalize the costs of tobacco.

    And jeff hoyt, as Mark B. so sagely pointed out, matching costs and prices isn’t the only reason to impose excise taxes. If there is a behavior the government wants to reduce, but making it illegal is cost-prohibitive, maybe an excise tax would be a more cost-effective way of reducing or eliminating the behavior. In general, as a policy matter, I don’t love using taxes to effect behavioral change, because it adds complexity to the Internal Revenue Code, but most people aren’t complexity hawks. Although there’s something pure about using the tax law solely to raise revenue, it’s always also functioned as a regulatory means.

  40. Eric Boysen on April 3, 2009 at 12:03 am

    I think it is extremely dangerous to apply a tax rate on cigarettes so high that it will encourage development of a black market. Sin taxes only will work as a deterent to consumption when applied in moderation. Raise them too high and the effects will be akin to prohibition; they will fuel organized crime and engender an attitude of disrespect for the law. They are also extremely regressive.

  41. amanda on April 3, 2009 at 12:15 am

    A ‘sin’ tax? Really? Only in Utah.

    As a matter of public policy–if you need revenue, why not tax a product that is harmful to public health? Better than taxing charitable giving, no? I wonder what our smoking President thinks about that logic…I digress.

    I personally would rather support an alcohol tax–since alcohol is a much greater risk to public safety. I’d rather my kids whiffed some second-hand smoke than be on the same road as a drunk. But I live in Idaho, so I’m irrelevant–almost like a stay-at-home mom on an Oprah Show panel.

  42. Dan on April 3, 2009 at 5:19 am

    Jacob,

    I don’t even know where to begin. By your logic the state can take away nearly all my money and this does not affect my freedom. You obviously have a different view of freedom than our founding fathers.

    You equate freedom with having money, which I strongly question. The government does NOT take away your choice, Jacob. If the government had prohibited cigarettes, like they attempted with alcohol in the 20s, then you would have a point. But since there is no attempt to curb your freedom to choose to purchase a vice, you have no point.

    Do they artificially inflate the price of a cigarette in an attempt to slow demand? You bet. And I applaud such a move, but that has absolutely nothing at all to do with your status as a free man, with the free choice to choose between spending even more on a cigarette and less on food for your kids. It’s a brilliant move. The choice becomes now, which do you prioritize more? Food for your kids, or cigarettes for your addiction.

    Frankly, $10 a pack is not high enough. It should be around $20. Just watch how few smoke then.

  43. Dan on April 3, 2009 at 5:26 am

    Jacob,

    To state my point once again, we create new externalities which didn’t previously exist with things like universal healthcare. We have already outlawed smoking in public places (in Oregon where I live you can’t smoke in bars!). When the government wants to provide healthcare it sounds great except that it means they can turn around and point out that this means they should be regulating everything which affects a person’s health. Over time this significantly chips away at liberty.

    I must comment on this. You seem bothered that cities and states have banned smoking in public places like restaurants and bars. I just want to make it clear that these are local and state issues, not federal. Those who tend to argue about “chipping away at our liberty” usually argue that the federal government is at fault. On the issue of smoking in public places, the federal government has not done anything. And also, the taxes on cigarettes, are also local issues, at the city and state level. The tax New York levied won’t affect New Jersey, for example. (Though I’m quite sure New Jersey will follow suit, though I’m not sure yet if they have yet banned smoking at restaurants. I think they have. Last time we went to a restaurant in NJ no one was smoking).

    So, is it okay for local and state agencies to pass such “limitations on freedom?”

  44. Floyd the Wonderdog on April 3, 2009 at 6:16 am

    The Hitler Youth handbook said. “Nutrition is not a private matter.” Fascists enforce your healthy behaviour with the power of the law.

    At what point do we allow people to make their own choices and suffer the consequences for them?

  45. Dan on April 3, 2009 at 6:21 am

    Floyd,

    At what point do we allow people to make their own choices and suffer the consequences for them?

    At what point does it become clear to some that no choice is taken away from anyone with a vice tax?

  46. aloysiusmiller on April 3, 2009 at 7:49 am

    Sin taxes can cause efforts to avoid the tax. Does anyone think that tobacco won’t be smuggled and sold illegally if the price goes high enough? Might one think that creating a new criminal class may then be a way to impoverish and assert control over a society.

    “The power to tax is the power to destroy” and destruction may be just what some conspiring men have in mind. Tyrants are notorious for pushing economic activity into fringe areas controlled by criminals that they in turn exact tribute from.

  47. aloysiusmiller on April 3, 2009 at 7:56 am

    http://www.publicintegrity.org/investigations/tobacco/pages/introduction/

    This link discusses the tobacco black market. I am not really a libertarian but this gives me pause.

  48. SilverRain on April 3, 2009 at 8:07 am

    I think “sin tax” in regards to cigarette smoking is somewhat different than a similar tax on alcohol. Smoking cigarettes, by its very commission, imposes a burden of ill health on others, on those who do not choose to smoke. Alcohol, pornography, sugar, caffeine, exercise, etc. all pose less of a hazard to those who do not choose to partake.

    By that reasoning, I think it reasonable that a heavy tax be imposed on voluntary luxuries which are directly detrimental to the health of others, while it is less reasonable to impose a similar tax on many other things. It makes more sense to fine or tax such things as alcohol and pornography only once they begin imposing themselves on the innocent, ie. drunk driving and involuntary sexual exploitation.

  49. Sam B. on April 3, 2009 at 8:37 am

    aloysiusmiller,
    Stating that the power to tax is the power to destroy really doesn’t say much. Theoretically, yes, but a rational actor that wants a revenue stream won’t tax activities at a rate so high as to destroy them, because that chokes off the revenue stream.

    Moreover, the power to regulate, the power to pass laws, and the power to blow things up are each also the power to destroy.

    And yes, a state’s excise taxes can create an incentive to smuggle. But where the excise tax is federal it is far more difficult (although admittedly not impossible). And the tobacco tax Kent is referring to is a federal, not a state, tax.

  50. aloysiusmiller on April 3, 2009 at 9:01 am

    Well LDS always have to consider agency and our archetypical council in heaven where Satan said he would force us back to heaven. This urge to force people back to heaven is as strong in LDS as it is in anyone. One of the problems with modern socialism is that it requires social conformity for the socialist ideals to be achieved. It doesn’t surprise me that misguided LDS buy into its “goodness” ideals. Tobacco taxation is a great hook for the LDS conscience. We recognize addiction as something bad. But I promise you that this cure is far worse than the disease.I think it would be far better to allow tobacco freely. This also requires that users bear the costs of their usage. If you smoke you pay all the cost of your smoking.

    Joseph Smith said “we teach doctrine and let people govern themselves”. Boyd K. Packer always encourages the teaching of doctrine as opposed efforts to change behaviors.

    That doesn’t filter down very far I admit.

  51. Dan on April 3, 2009 at 9:09 am

    Once again, I ask, how does such a tax inhibit freedom? How does it actually take away one’s ability to choose for himself what he does? Why does no one who is against this tax answer that question.

  52. Dan on April 3, 2009 at 9:10 am

    I keep hearing the argument rooted back in our Mormon beliefs about free agency, but no one has actually yet stated how one’s ability to choose is taken away by such a tax. If you make an argument that one’s ability to choose is taken away by such a tax, you need to back that up with actual evidence. As no one’s free agency is taken away, the more you harken to that argument, the worse off your position is because it just isn’t factual.

  53. Dan on April 3, 2009 at 9:23 am

    Is not the point of a vice tax to inflict more pain and consequence to someone choosing of their own free will to participate in said vice?

  54. aloysiusmiller on April 3, 2009 at 9:23 am

    At what point does taxation start inhibiting any freedom. If you were taxed at 100% and housed in a barracks and whipped out to the fields would you be truly free?

    Tobacco taxation has always been justified as a “good” enforcer or a bad punisher. The minute it starts to be justified as a revenue enhancer then we are on the high road to evil because limiting smoking will be a detriment to revenue. Staying out of this mudhole (sin taxation) avoids that altogether. People should be free to choose and also free to suffer the consequences of their choices.

    Noooo.. the socialists say we can’t have any failure.

  55. Sam B. on April 3, 2009 at 9:43 am

    aloysiusmiller,
    I’m not sure who these straw socialists you’re referring to are. Yes, income tax rates approaching 100 percent are confiscatory, and will have certain consequences (i.e., will encourage people not to work and to get their money from a source that isn’t taxed as high, whether it be investing in government bonds or working in a profession not subject to the 100 percent taxation). With excise and sales taxes, 100 percent is not inherently confiscatory.

    That is, if I want a pack of cigarettes that, sans taxes, costs $4, you can impose a 100 percent excise tax on it. Now that pack costs me $8. My personal calculus changes at that point–I have to evaluate if a cigarette is worth twice as much to me as it was before. Chances are that I will smoke less, although I don’t know how much less–it depends on how much smoking is worth to me. But that 100 percent (again, excise as opposed to income) tax does not take all that I have, and is not a step toward some apocolyptic Randian pseudo-straw socialism.

    That’s not to say that a 100 percent sin tax is a good idea; it may be a horrible idea. But it is really super-important in this discussion not to conflate so-called sin taxes with income taxes–the rate structures can be significantly different, with significantly different results.

  56. bbell on April 3, 2009 at 9:53 am

    I always find “sin”taxes amusing. I agree with Geoff and Sam B.

    One interesting thing is that because of the large tax revenues that tobacco taxes produce it creates an incentive for the government to keep the tobacco industry healthy. Essentially you can argue that the Fed government is in the tobacco business. Both by heavy tax revenues and the fact that the USDA subsidizes tobacco farming

  57. Clean Cut on April 3, 2009 at 9:58 am

    Just please, please, don’t tax ice cream. :)

  58. aloysiusmiller on April 3, 2009 at 11:49 am

    Dan, ask yourself why the object is to be taxed. Is it to reduce its use? If the answer is yes then the objective is control and control is a reduction of agency.

    I get your point. But I disagree. Choice is influnced directly and indirectly.

    Rest assured that tobacco taxation would not be an issue of our medical system were fully based on personal responsibility. i.e. you can get the medical care you can afford.

    It seems a heartless standard but I would argue that old fashioned slavery is a more moral way to solve the problem of caring for those who will not care for themselves than modern socialism.

  59. Dan on April 3, 2009 at 11:52 am

    aloysiusmiller,

    At what point does taxation start inhibiting any freedom. If you were taxed at 100% and housed in a barracks and whipped out to the fields would you be truly free?

    Sam already mentioned it, but it would be very nice to differentiate between excise taxes and income taxes. Furthermore, where do you get the “housed in barracks and whipped out into the fields” from?!?! (Although we would be in better shape that way…) ;)

  60. Dan on April 3, 2009 at 11:54 am

    aloysiusmiller,

    Dan, ask yourself why the object is to be taxed. Is it to reduce its use? If the answer is yes then the objective is control and control is a reduction of agency.

    In terms of assessing one’s freedom, the “why” a tax is set up matters not. It really does not matter what purpose is behind the tax. The tax does not take away your choice to partake of that vice.

    Now, as to its actual purpose. Let me ask you, for what purpose does God set up a punishment for sin? And does that punishment constitute control? And is that control a reduction of agency?

  61. Dan on April 3, 2009 at 11:56 am

    It seems a heartless standard but I would argue that old fashioned slavery is a more moral way to solve the problem of caring for those who will not care for themselves than modern socialism.

    Why do you say that? Are you telling me that African Americans living in the 1800s as slaves are living better lives than most Europeans (who you would call socialists)? That’s just absurd. Particularly for one claiming to stand for freedom!

  62. aloysiusmiller on April 3, 2009 at 1:39 pm

    61. First of all I didn’t say that slavery was good just that it was better than socialism. We could argue how much socialism is practiced in Europe but I would say that slaves (and why must we add a racial adjective? the Dems lost the small war over race based slavery and have won the big won on universal slavery) are better off than the people of North Korea. I also think that without the brakes of America socialism is very likely to end up looking more like North Korea than Sweden and if not North Korea then Saudi Arabia or Syria which practice their own forms of social conformity/social control and redistribution.

  63. Kent Larsen on April 3, 2009 at 3:35 pm

    aloysiusmiller (62):

    WOW. I’m not sure that you could be more polemical here. Slavery is better than life in North Korea? I’ll bet most North Koreans would disagree!! Perhaps they have a subsistence life, near starvation, but I doubt authorities in North Korea take the time to micro-manage their lives and beat them when they don’t do what they are supposed to do.

    Then you claim that “socialism” in America is “very likely to end up looking more like North Korea than Sweden.” Huh? How could you possibly end up with such a conclusion? Culturally, we are so much closer to Europe than North Korea that the idea is preposterous.

    Dude, you really need to tighten up your logic before you write it down.

  64. aloysiusmiller on April 3, 2009 at 4:22 pm

    Nice dismissive wave of non-logic and inability to engage Mr. Larsen.

    What did Lenin say about useful tools…? or was it , never mind.

    Nothing so arrogant as a liberal who says be logical. D’oh

  65. Dan on April 3, 2009 at 4:47 pm

    aloysiusmiller,

    We could argue how much socialism is practiced in Europe

    We could indeed. It is at the heart of the complaints against the Democratic party in America. We’re not talking about the Totalitarian Communism you see in North Korea. To try and compare America to North Korea is simply absurd. You are straining to make your point and are on weak ground, aloysius. There is no threat that America will turn into a North Korea.

    America socialism is very likely to end up looking more like North Korea than Sweden

    Why do you say that? What indications are there that that will be our path? I’m honestly curious (at least to see the root of this silly path, who began it—Glenn Beck maybe?)

    Saudi Arabia or Syria which practice their own forms of social conformity/social control and redistribution.

    You mean a kingdom? Syria is a dictatorship, but Saudi Arabia is a kingdom, run by a king. Syria is run by a “president.” Please, do a little research.

    Anyways, no one who is against excise taxes has yet explained to my satisfaction how such taxation inhibits a person’s freedom of choice.

  66. Kent Larsen on April 3, 2009 at 4:50 pm

    Nice dismissive wave of non-logic and inability to engage Mr. Larsen.

    What did Lenin say about useful tools…? or was it , never mind.

    Nothing so arrogant as a liberal who says be logical. D’oh

    Um, I don’t think I was rude. I tried to simply ask how you can possibly justify your leaps in logic.

    BUT, your very rude reply is not warranted. Don’t do it again.

  67. Sam B. on April 3, 2009 at 5:00 pm

    Dan,
    On the margins, an excise tax could eliminate somebody’s ability to purchase something. If a pack of cigarettes sans tax costs $2, I only have $3, but the sales tax on such pack of cigarettes is set at 100%, I’m incapable of buying those cigarettes.

    But I agree with your implicit question: so what? If the rain doesn’t fall in tobacco country, there’s less tobacco production, and the price of a pack rises to $4, I also can’t buy that pack of cigarettes. Maybe I have to buy a pack of Nicorette, at $1.50 or whatever, instead. But that’s the way the world works–I do my personal cost-benefit analysis in my purchasing decision.

    I should repeat that generally I don’t like sin taxes, principally for the reasons that they add complexity to the tax system and that government funds itself from a diminishing revenue stream (with a side of Geoff B.’s regressive taxation thrown in for good measure). But of themselves, I don’t see anything immoral about them and, insofar as they correct mispricing, they’re probably more moral than not imposing such an excise tax.

  68. aloysiusmiller on April 6, 2009 at 7:26 pm

    The tobacco tax has put the government in bed with the tobacco industry and here is a corrupting effect:

    http://washingtontimes.com/news/2009/apr/06/house-lights-up-fda-regulation/

  69. queuno on April 10, 2009 at 11:42 pm

    Red light cameras are more of a concern than cigarettes. They are a revenue stream for governments under the guise of “safety”, but studies now show that they simply replace one form of accident for another.

    Are sin taxes forcing people into other sins?

    I guess I’m kind of indifferent to a sin tax. The Church imposes its own “tax” on certain sins, so it’s not like we aren’t all willing participants in this type of program.

    And if my tax dollars didn’t go to pay for the wages of win, then I wouldn’t care as much.

    The American founding fathers may not have approved of a sin tax, but I have a really, really hard time believing that the Lord doesn’t approve.

  70. Kent Larsen on April 11, 2009 at 10:08 am

    Red light cameras are dangerous? cite please!!

    I’m also confused by your statement, “The Church imposes its own “tax” on certain sins” — what are you referring to?