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1 Gerald Prante & Joseph Henchman, Funding S-CHIP with Federal Cigarette Tax Increase is Poor Tax Policy 1 (2009)

handle is hein.taxfoundation/ffbfixz0001 and id is 1 raw text is: FISCAL FACT January 2009 No. 158 Funding S-CHIP with Federal Cigarette Tax Increase is Poor Tax Policy By Gerald Prante and Joseph Henchman The House of Representatives yesterday voted 289-139 to pass a 156% increase in the federal excise tax on cigarettes (taking it from 39 cents per pack to $1.00, not counting state taxes which average over $1 a pack). The estimated $33 billion tax hike (over 4-1/2 years) would be earmarked to expand the State Children's Health Insurance Program (S-CHIP). The bill is almost identical to a previous version that was vetoed in the summer of 2007, and it will soon go to the Senate. Some opponents take issue with the mechanics of funding health care for children, and some with the idea of government involvement at all. Our criticism is much narrower: a politically popular and expensive program should never be funded by a small, low-income, politically unpopular minority like cigarette smokers. Cigarette Taxes Are the Most Anti-Poor Method of Funding S-CHIP In July 2007, we concluded that a cigarette tax increase hurts the poor more than virtually any other way of raising money to fund SCHIP expansion.fi (The chart is reproduced below.) Table 1 Household Income Quintile Taxes that Could Be Used to Raise S35 Billion to Fund S-CHIP Expansion (Average Tax Increase per Household in Quintile) Cigarette' Alcohol Air 'Corporate Payroll Individual Tax Tax Gas Tax Transport' Income Tax Income Increase Increase Increase Tax Tax Increase Tax U 1AX FOUNDATION