Tax Analysts Blog

Billionaires Who Want to Tax Poor People

Posted on Oct 28, 2015

Have you ever noticed that rich people sometimes spend their time trying to make life harder for poor folks? Billionaire investment mogul Thomas Steyer is one of them. As a billionaire, he is, well, really rich. In the past, he has funded efforts to impose regressive taxes on energy. Now he is funding an attempt to significantly increase California's cigarette tax (from 87 cents per pack to $2.87 per pack). An initiative filed by Save Lives California will likely be on the 2016 ballot with Steyer's help. Besides the big tax increase, the initiative will impose an equivalent tax on electronic cigarettes.

Save Lives California is a coalition of people who (1) sincerely care about health issues (for example, the American Lung Association); (2) live for no other reason than to run other people's lives (Steyer); and (3) want money (public sector unions). The coalition says it will raise an additional $1.5 billion a year. The money will be used for a variety of reasons. But let's be clear: Steyer says his goal is to get people to quit smoking. I won't defend smoking, but I find it offensive that someone would use the tax laws to impose their belief system on others. Actually, I find it offensive when anyone tries to impose their belief system on anyone else.

The tax laws are supposed to be used to raise revenue to pay for services sought by the public. They should not be used for any other reason. Specifically, they should not be used as an incentive or punishment. There are many ways to lord it over people besides taxing them. Indeed, the regulatory system has done far more to curb smoking than taxes. In most of America, you cannot smoke in public places like restaurants, bars, offices, etc.

To the extent that excise taxes are justified, they should be used to pay for externalities. And this initiative will purportedly do that. But that is not the goal of Steyer or the coalition. They want prohibition through the tax laws. The public service unions don't care about externalities. They care about money. The right thing to do is to determine the public costs of smoking in California and set the tax accordingly. The state may in fact require more cigarette tax revenue to pay for those costs; it may not.

But even if you aren't offended by some billionaire's desire to tell you how to live, think about the two things that are very wrong with this initiative. First, all excise taxes, particularly those on tobacco, are regressive. Poor people will pay more. It is hypocritical to proclaim that you care about the poor and dispossessed and then back decidedly regressive taxes.

Second, and just to show you that it really is all about the money, the initiative will impose significant taxes on electronic cigarettes. If people really cared about the health risks of smoking, they would be encouraging -- indeed subsidizing -- electronic cigarettes. Electronic cigarettes help people quit the far more dangerous habit of smoking real cigarettes. That's why Big Tobacco is getting into the e-cig business. They get it; liberals apparently don't.

Read Comments (1)

edmund dantesOct 27, 2015

Steyer is the poster boy for liberal fascism.

I hope this initiative fails, but it's California. All the sensible people have
already moved out.

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