The Sin Tax Backlash

posted at 11:31 am on February 23, 2013 by Jazz Shaw

Regular Hot Gas readers are already familiar with the various attempts at imposing sin taxes around the country on products like tobacco, alcohol and fast foods, as well as the dismal record of “success” such efforts frequently meet. But there is a new study out this month which is definitely worth your time to read. Chris Snowdon, a fellow at the Adam Smith Institute in London, has published The Wages of Sin Taxes, available at the link in a convenient to read or download format.

In it, he looks at the hard math behind common assumptions regarding lifestyle behavior and the effects things like smoking, drinking and eating rich foods have on the rest of society. What will come as a shock to some people is that increased taxes not only fail to curb such behavior, but wind up doing very little to benefit the rest of society at large, and largely serve as convenient revenue generators for bloated government entities at all levels.

A few excerpts:

“Sin taxes” are tax increases. Faced with his own budget deficit in 2009, President Barack Obama raised the federal cigarette tax by 156 percent,despite having promised a year earlier that, “no family making less than $250,000 a year will see any form of tax increase.” Largely as a result of the president’s U-turn, the federal government’s sin tax revenue—including tobacco, alcohol, guns,and ammunition—leapt from $14 billion in 2008 to over $20billion.

States and cities levy sin taxes, too. As the recession deepened, state governments raised taxes on gasoline, tobacco, soda and bottled water. Colorado started taxing candy, Texas introduced a tax on lap dancing clubs (the“pole tax”), and several states contemplated a tax on pornography (the “skin tax”). Phoenix, Arizona, levied a 2 percent tax on all food to help pay off the city’s $277 million debt. When the policy encountered opposition from citizens, politicians considered taxes on tattoo parlors, strip clubs, and escort agencies, instead.

People are fooled. A 2008 poll of New Yorkers found that 52 percent would support a soda tax,but this rose to 72 percent when told the money would be used for “obesity prevention.” In reality, it is rare for the spoils of a sin tax to be spent as intended. Typically, the money raised goes toward routine government projects and debt payments. Of the $25.3 billion the U.S. government collected from state tobacco taxes in 2011, for example, less than 2 percent was spent on smoking cessation.

Oft-cited statistics are wrong. The most commonly cited U.S. cost-of-smoking estimate is $193 billion per annum. This figure appears to have no foundation in the academic literature and the calculations on which it is based have never been published in a peer-reviewed journal. The only source for the figure is a page on the Centers for Disease Control and Prevention’s website dating from 2008. No details are provided except that $96.8 billion is attributed to lost productivity and $96 billion is attributed to medical costs. The dearth of information makes it impossible to ascertain what proportion of these costs are private.

A lot of that may already be common sense to conservative readers, but it should come as no surprise that these flawed assumptions are frequently the basis of thought for liberal opponents and the basis of legislation for elected leaders seeking a new cash flow scheme. But none of this is actually new information. Snowdon uncovers a beautiful quote from Austrian economist Ludwig Von Mises dating all the way back to 1927 which is worth sharing here.

If the majority of citizens is, in principle, conceded the right to impose its way of life upon a minority, it is impossible to stop at prohibitions against indulgence in alcohol, morphine,cocaine, and similar poisons. Why should not what is valid for these poisons be valid also for nicotine, caffeine, and the like? Why should not the state generally prescribe which foods maybe indulged in and which must be avoided because they are injurious?

We see that as soon as we surrender the principle that the state should not interfere in any questions touching on the individual’s mode of life, we end by regulating and restricting the latter down to the smallest detail. The personal freedom of the individual is abrogated. He becomes a slave of the community, bound to obey the dictates of the majority.

If you have some free time this weekend, I would suggest you take the time to read through The Wages of Sin Taxes. It contains a lot that you can keep in mind the next time your elected representatives bring up yet another tax hike to “save you from yourselves.”


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Darn it that is one yummy photo of a cheeseburger and fries. Food pornography.

Paul-Cincy on February 23, 2013 at 11:38 AM

People are fooled. A 2008 poll of New Yorkers found that 52 percent would support a soda tax,but this rose to 72 percent when told the money would be used for “obesity prevention.”

We have an electorate with a total absence of any critical thinking ability. We’re doomed.

On the bright side, California will have High Speed Rail!

Cicero43 on February 23, 2013 at 11:38 AM

Oft-cited statistics are wrong. The most commonly cited U.S. cost-of-smoking estimate is $193 billion per annum. This figure appears to have no foundation in the academic literature and the calculations on which it is based have never been published in a peer-reviewed journal. The only source for the figure is a page on the Centers for Disease Control and Prevention’s website dating from 2008. No details are provided except that $96.8 billion is attributed to lost productivity and $96 billion is attributed to medical costs. The dearth of information makes it impossible to ascertain what proportion of these costs are private.

This has always been BS. Smokers are just easy targets and I’m speaking as a non-smoker.

whbates on February 23, 2013 at 11:40 AM

Obama is conditioning everyone to think that owning guns is a “sin”.

The only sin would be a disarmed America that cannot defend itself from
tyrants like Obama.

redguy on February 23, 2013 at 11:40 AM

Darn it that is one yummy photo of a cheeseburger and fries. Food pornography.

Paul-Cincy on February 23, 2013 at 11:38 AM

That does look good but we all know what it looks like when you take it out of the bag.

CW on February 23, 2013 at 11:40 AM

We have an electorate with a total absence of any critical thinking ability. We’re doomed.

On the bright side, California will have High Speed Rail!

Cicero43 on February 23, 2013 at 11:38 AM

The only ones that will be able to afford tickets will be flying in their private jets anyway.

If it every does get built. We will sees decades of breakdowns and accidents and eventually
it will be closed after they throw a trillion dollars at it.

redguy on February 23, 2013 at 11:43 AM

If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat.
If you get too cold I’ll tax the heat,
If you take a walk, I’ll tax your feet.

John the Libertarian on February 23, 2013 at 11:45 AM

This has always been BS. Smokers are just easy targets and I’m speaking as a non-smoker.

whbates on February 23, 2013 at 11:40 AM

I concur. I think smokers get a large amount of unearned scorn and derision by society. I only smoked for two weeks, when I was 12. I am vocal in my disdain for the anti smoking laws that are present.

astonerii on February 23, 2013 at 11:47 AM

On the bright side, California will have High Speed Rail!

Cicero43 on February 23, 2013 at 11:38 AM


and Cincinnati is getting their street car in part due to the generosity of the American tax payer. Boy we are a dumb lot.

CW on February 23, 2013 at 11:47 AM

Remember when “sin taxes” meant taxes on liquor and gambling? Back then, sin taxes referred to things that social conservatives might object to.

Now, “sin taxes” refer to soft drinks, styrofoam, high-fat foods, bottled water, candy.

The new Puritans are 100 times as restrictive as the old Puritans.

tom on February 23, 2013 at 11:49 AM

but wind up doing very little to benefit the rest of society at large, and largely serve as convenient revenue generators for bloated government entities at all levels.

BOOM!

BallisticBob on February 23, 2013 at 11:50 AM

You sin!

tommy71 on February 23, 2013 at 12:02 PM

a tax on lap dancing clubs (the“pole tax”), and several states contemplated a tax on pornography (the “skin tax”).

…if you would do THIS in Washington DC alone…we could wipe out the deficit!

KOOLAID2 on February 23, 2013 at 12:11 PM

Shouldn’t those that fail to understand the importance of our collective good health be made to pay for those choices?”

…..and yet, we continue to complain, and voters yawn.

All the white folks like USA Today continue to promote that Obama is supported on Guns and the budget issues and we all can’t wait for Obamacare to make us behave.

PappyD61 on February 23, 2013 at 12:12 PM

The beauty of sin taxes is they are very popular amongst those that don’t engage in that particular sin. Propose a tax on something that impacts them and these same people will scream loudly, failing to make the connection.

teejk on February 23, 2013 at 12:13 PM

Much like Obamacare’s mandate to force employers to provide ‘acceptable’ health insurance (or else), these ‘sin taxes’ are predicated upon government’s police power to enforce an over-arching societal obligation concerning the care & welfare of – shall we say – the more self-destructive among us.

This govt. hubris is in condescension to Christian charity and the benevolence societies that once provided such compassion for the ‘less fortunate’ in the guise of soup kitchens, work houses, sobriety missions and homeless shelters – with the understanding that sins are forgiven, yet the consequences will still be born throughout one’s life.

This is antithetical to liberal thought and its central doctrine of social justice because, personal responsibility be damned, those consequences are not equal outcomes for all of society. The solution, of course, is for an all powerful collectivist central authority must make right, and taxation is always the first action.

locomotivebreath1901 on February 23, 2013 at 12:14 PM

The biggest problem with sin taxes is that governments become dependent on the revenue. They need people to engage in unwanted behavior in order to fund various programs.

rbj on February 23, 2013 at 12:17 PM

sigh………..if only SOMEONE, ANYONE, in elected office could EFFECTIVELY communicate through the Media any of these truths.

http://townhall.com/columnists/johnhawkins/2012/07/03/the_40_best_quotes_from_ronald_reagan/page/full/

39) “The American dream is not that every man must be level with every other man. The American dream is that every man must be free to become whatever God intends he should become.”

37) “Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence.”

35) “One way to make sure crime doesn’t pay would be to let the government run it.”

32) “One legislator accused me of having a nineteenth-century attitude on law and order. That is a totally false charge. I have an eighteenth-century attitude. That is when the Founding Fathers made it clear that the safety of law-abiding citizens should be one of the government’s primary concerns.”

27) “If you’re explaining, you’re losing.”

26) “I hope we have once again reminded people that man is not free unless government is limited. There’s a clear cause and effect here that is as neat and predictable as a law of physics: as government expands, liberty contracts.”

25) “We must reject the idea that every time a law’s broken, society is guilty rather than the lawbreaker. It is time to restore the American precept that each individual is accountable for his actions.”

24) “Government’s first duty is to protect the people, not run their lives.”

22) “If we lose freedom here, there is no place to escape to. This is the last stand on Earth.”

21) “You and I have a rendezvous with destiny. We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the first step into a thousand years of darkness. If we fail, at least let our children and our children’s children say of us we justified our brief moment here. We did all that could be done.”

19) “Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

18) “It isn’t so much that liberals are ignorant. It’s just that they know so many things that aren’t so.”

16) “How do you tell a communist? Well, it’s someone who reads Marx and Lenin. And how do you tell an anti-Communist? It’s someone who understands Marx and Lenin.”

11) “I’ve spoken of the shining city all my political life, but I don’t know if I ever quite communicated what I saw when I said it. But in my mind it was a tall proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace, a city with free ports that hummed with commerce and creativity, and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That’s how I saw it and see it still.

And how stands the city on this winter night? More prosperous, more secure, and happier than it was eight years ago. But more than that; after 200 years, two centuries, she still stands strong and true on the granite ridge, and her glow has held steady no matter what storm. And she’s still a beacon, still a magnet for all who must have freedom, for all the pilgrims from all the lost places who are hurtling through the darkness, toward home.”

8) “Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children’s children what it was once like in the United States where men were free.”

7) “Our people look for a cause to believe in. Is it a third party we need, or is it a new and revitalized second party, raising a banner of no pale pastels, but bold colors which make it unmistakably clear where we stand on all of the issues troubling the people?”

5) “Of the four wars in my lifetime, none came about because the U.S. was too strong.”

4) “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

3) “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’”

2) “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.”

Is there anyone?

And if we need anymore proof that the Conservative movement needs a rebirth here I am quoting the words of a man that passed away almost 9 years ago…………instead of the words of any of our current crop of so called leaders.

#sad

PappyD61 on February 23, 2013 at 12:19 PM

Nice to know but FEH… anybody with 5 working brain cells to rub together, knew that it was always about the money.

CPT. Charles on February 23, 2013 at 12:27 PM

Regular Hot Gas readers?!!!!

You having one of those “off” days in that you don’t even know the name of your own site?!!!!

pilamaye on February 23, 2013 at 12:28 PM

Sometimes, it works.

http://usatoday30.usatoday.com/news/nation/story/2012-09-10/cigarette-tax-smoking/57737774/1

The difference — this was a national tax. State or local taxes allow the taxed another route — it’s why Ebay has such a large following — and why Amazon used to.

unclesmrgol on February 23, 2013 at 12:43 PM

At the Seneca Reservation near Buffalo, the stores didn’t charge NY cigarette taxes because the state had no authority; the Senecas are an independent nation by treaty. But NY fought tooth and nail to make them collect the taxes, and won in state courts. They also stationed troopers to stop cars leaving reservation stores to search them to confiscate cigarettes if the person didn’t pay the tax on the spot (it’s $4.35 a pack–50% of the price in a store outside the reservation).

NY also charges sales tax on food and clothing (8.2%) but is ‘gracious’ enough to have a tax-amnesty day once a year for clothes.

And still the state is broke!

I’m waiting for the fat taxes to come into effect. When politicians first proposed the idea a decade ago, half the libs said it’s a smart thing to do, and the other half told we Conservatives we’re ‘paranoid’. I’m surprised the taxes aren’t in force already on a large scale.

It’s never going to stop, and I expect Albany and eventually even the Feds to find new ‘sins’ where they can lay a levy. For our own good, of course.

And for the children–gotta remember them, too. And to think we once started a war over a penny tax on tea.

Liam on February 23, 2013 at 12:46 PM

This figure appears to have no foundation in the academic literature and the calculations on which it is based have never been published in a peer-reviewed journal. The only source for the figure is a page on the Centers for Disease Control and Prevention’s website dating from 2008.

Of course. The acronym for such “data” should be ANPOOSA (a number pulled out of someone’s ass).

GarandFan on February 23, 2013 at 1:02 PM

government’s sin tax revenue—leapt from $14 billion in 2008 to over $20billion

…where else are we going to get the money to pay off the ‘bundlers” from the green energy companies like Solydra, Fisker Automotive, et al ?

KOOLAID2 on February 23, 2013 at 1:08 PM

At the Seneca Reservation near Buffalo, the stores didn’t charge NY cigarette taxes because the state had no authority; the Senecas are an independent nation by treaty. But NY fought tooth and nail to make them collect the taxes, and won in state courts. They also stationed troopers to stop cars leaving reservation stores to search them to confiscate cigarettes if the person didn’t pay the tax on the spot

Liam on February 23, 2013 at 12:46 PM

…unstinking believable!

KOOLAID2 on February 23, 2013 at 1:13 PM

It’s never going to stop, and I expect Albany and eventually even the Feds to find new ‘sins’ where they can lay a levy. For our own good, of course.

Liam on February 23, 2013 at 12:46 PM

Coming soon: The Government Swear Jar.

Axeman on February 23, 2013 at 1:14 PM

Taxes are a political dictatorial weapon, and evil politicians use them like a sword cut US up into tiny little sub-groups.

On the other hand… Bacon burgers at mid-night last night. Not my usual but YES!

RalphyBoy on February 23, 2013 at 1:18 PM

GarandFan on February 23, 2013 at 1:02 PM

Part of the number is real…when my 115 year old great grandmother died in a freak motorcycle accident and they found out she smoked once, her medical care costs were attributed to smoking (credits to Larry the Cable guy). As for the lost productivity part, I guess those scarves she used to knit and give as Christmas presents had some value. I think the CDC says they were worth about the same as a military hammer ($1,000′s).

teejk on February 23, 2013 at 1:21 PM

And to think we once started a war over a penny tax on tea.

Liam on February 23, 2013 at 12:46 PM

Where are the men & women of our time who would do this?
It needs to happen again.
The Liberty tree needs watered again, unfortunately.

Badger40 on February 23, 2013 at 1:24 PM

…unstinking believable!

KOOLAID2 on February 23, 2013 at 1:13 PM

NY wanted its money, and come hell or high water it intended to get it.

Coming soon: The Government Swear Jar.

Axeman on February 23, 2013 at 1:14 PM

If that ever happened, I’d be broke in four hours. LOL

Where are the men & women of our time who would do this?
It needs to happen again.
The Liberty tree needs watered again, unfortunately.

Badger40 on February 23, 2013 at 1:24 PM

I have a sad feeling it’s coming, it seems almost inevitable at this point. Everyone seems angry, everyone is suspicious of his neighbor and even of some family members. Government could stop it all if it backed off, but Obama&Co keep moving the goalposts farther left, creating new crises, and fanning flames.

No good can come from this.

Liam on February 23, 2013 at 1:36 PM

Government could stop it all if it backed off, but Obama&Co keep moving the goalposts farther left, creating new crises, and fanning flames.

No good can come from this.

Liam on February 23, 2013 at 1:36 PM

Yes. It never stops and it’s getting worse. Nothing is getting better.

juliesa on February 23, 2013 at 1:50 PM

pilamaye on February 23, 2013 at 12:28 PM

It’s a classic quote (blunder) by Gov Rick Perry during last years primary.

seesalrun2 on February 23, 2013 at 2:02 PM

Resist We Much on February 23, 2013 at 1:50 PM

Link not working

Schadenfreude on February 23, 2013 at 2:14 PM

Coming soon: The Government Swear Jar.

Axeman on February 23, 2013 at 1:14 PM

Here’s $50 – that should cover me til dinner….

dentarthurdent on February 23, 2013 at 2:43 PM

What has factual truth and logic got to do with the deceit-filled agendas that modern sophisticated Americans want to hear?

Don L on February 23, 2013 at 2:59 PM

Obama is conditioning everyone to think that owning guns is a “sin”.

redguy on February 23, 2013 at 11:40 AM

Singing to the firearm I’m cradling…..

GWB on February 23, 2013 at 3:01 PM

The Liberty tree needs watered again, unfortunately.

Badger40 on February 23, 2013 at 1:24 PM

And, some pruning. (As in cutting off some of the dead limbs; you can tell by their deep blue coloration.)

GWB on February 23, 2013 at 3:05 PM

Singing to the firearm I’m cradling…..

GWB on February 23, 2013 at 3:01 PM

My son borrowed most of mine to go target shooting with some friends up in the mountains this weekend. Only 2 left (for now) that I can cradle and sing to….

dentarthurdent on February 23, 2013 at 3:23 PM

And, some pruning. (As in cutting off some of the dead limbs; you can tell by their deep blue coloration.)

GWB on February 23, 2013 at 3:05 PM

Yes – must trim those off before they infect the rest of the tree enough to kill it.

dentarthurdent on February 23, 2013 at 3:24 PM

Good video over on Townhall.
http://townhall.com/video/gun-control-laws-have-racist-origin

I just wish they didn’t cut it off while the guy was making a very good point.

dentarthurdent on February 23, 2013 at 3:35 PM

but this rose to 72 percent when told the money would be used for “obesity prevention.”

I suppose the question was phrased “would you support this tax if I told you it meant you wouldn’t have to look at fat people.”

agmartin on February 23, 2013 at 3:51 PM

Coming soon: The Government Swear Jar.

Axeman on February 23, 2013 at 1:14 PM

Here’s $50 – that should cover me til dinner….

dentarthurdent on February 23, 2013 at 2:43 PM

Anybody know the cost for a season pass or lifetime membership? Asking (or is it axing?) for a friend.

teejk on February 23, 2013 at 4:19 PM

But, of course – obama supporters (non-taxpayers) pay for everything with their EBT cards, so, they don’t care.

Pork-Chop on February 23, 2013 at 6:58 PM

The only source for the figure is a page on the Centers for Disease Control and Prevention’s website dating from 2008. No details are provided except that $96.8 billion is attributed to lost productivity and $96 billion is attributed to medical costs.

This is how the nanny-statists justify taking away freedom to engage in unhealthy or risky behaviors – on the grounds that the medical costs of these behaviors result in higher insurance premiums and higher taxes for others.

But it’s not necessarily true.

Those who live healthier lives live longer. But they still eventually get sick and die.

Rich H on February 23, 2013 at 8:24 PM

Our town, now that it has painted all the bike lanes possible, wants to tax the bikes. hahahahaha. They already make you buy a tag, but it is a forever tag and helps the police identify your bike if it is stolen and recovered. See how this works, another it’s for your own good at work.

Kissmygrits on February 24, 2013 at 8:47 AM

Everyone seems angry, everyone is suspicious of his neighbor and even of some family members. Government could stop it all if it backed off, but Obama&Co keep moving the goalposts farther left, creating new crises, and fanning flames.

No good can come from this.

Liam on February 23, 2013 at 1:36 PM

I am seeing evidence of this type of angry hopelessness here in ND as well.
It’s permeating every part of society that I’m a part of where I live. IT’s in everyone’s mind & on their lips.
Everyone is getting disgusted with all forms of government.
And they get angrier everyday.

Badger40 on February 24, 2013 at 5:22 PM

Great article

api on February 25, 2013 at 10:28 AM