2013-01-03 16:20:42 - WASHINGTON, D.C. (January 3, 2013): Congress took the country over the fiscal cliff, and further endangered its credit rating, primarily over tax changes expected to raise only about $600 billion over 10 years, while it completely ignored a huge unnecessary cost – and potential revenue source – worth almost 5 times as much which is literally burning while Congress fiddles, argues the man who helped put the smoker surcharge into Obamacare.
The key provision in the temporary fiscal cliff fix – an increase in the marginal tax rate on a small percentage of high earners – is expected to raise some $395 billion over 10 years, but smoking imposes totally unnecessary costs of over $300 billion every single year, for a total of over $3 trillion over the same 10 year period, says public interest law professor John Banzhaf.
In short, reducing smoking by as little as 15% would reduce the deficit more than raising income tax rates on the wealthy, but Congress is totally ignoring this huge elephant in the room, he argues.
Since nonsmokers are now forced to pay most of these over $3 trillion in totally unnecessary costs – largely
in the form of higher taxes for Medicare, Medicaid, veterans' benefits, Indian benefits, etc. and in bloated health insurance premiums – it's not unreasonable to ask smokers to pay more of their fair share of the portion of these costs not covered by cigarette taxes.
Requiring smokers to pay even 15% of the costs they now impose on others would raise far more than the new wealth tax, would not adversely affect investment in new businesses as some fear higher tax rates on the wealthy could, and might seem to be fairer since those paying the tax are simply accepting personal responsibility for the costs they now impose on others, and can escape it completely simply by quitting smoking.
Moreover, since increasing the costs of being a smoker – e.g. from higher taxes – is one of the most effective ways of helping the great majority of smokers who already wish to quit to do so, there would be lasting savings and a long-term reduction in the deficit by reducing smoking-related health care and other totally unnecessary expenses as millions of additional smokers are helped to quit.
Each smoker annually spends about $1,400 a year on tobacco, so they can afford to pay more in taxes – an amount which would raise more than the new high-earner taxes as well as slash health care costs, and can be completely avoided by quitting.
Also, in part because of Banzhaf's efforts, smokers already face a new 50% surcharge on the cost of their health insurance under Obamacare. But that huge stream of revenue goes to health insurance companies, and does nothing to reduce the deficit and the burden on taxpayers.
Legislation directing revenue from the new smoker surcharge to the government, rather than to private insurers, would go a long way towards helping to balance the budget, Banzhaf suggests.
JOHN F. BANZHAF III, B.S.E.E., J.D., Sc.D.
Professor of Public Interest Law
George Washington University Law School,
FAMRI Dr. William Cahan Distinguished Professor,
Fellow, World Technology Network,
Founder, Action on Smoking and Health (ASH)
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