Limited Taxation & Government
Post Office Box 408 Peabody, Massachusetts
01960 (617) 248-0022
E-Mail: email@example.com Web-page: http://cltg.org
Thursday, December 3, 1998
"Beyond taxing smokers to cut smoking, politicians want to keep the taxes
-- and not to rebate them. Public-health advocates covet extra money for pet programs; and
lawyers crave their fees."
The Amazing Smoke Screen
Robert J. Samuelson
It didn't take long.
Our bill was filed yesterday to
reimburse taxpayers by returning the $7.6 billion-plus tobacco settlement to them to
compensate for their tax money allegedly spent over the decades to care for sick smokers,
and the debate has begun.
We're talking about $7.6 billion over 25
years, then $325 million every year thereafter, forever.
But before we get into it any further,
I've got one question that seems to have been run over and lost in the dust of this greed
Last year alone, some $300
million in tobacco excise and sales taxes was paid by just smokers -- over, above,
and in addition to what all taxpayers were gouged -- and poured into the state's
Does anyone really believe that last
year it cost the commonwealth more than that $300 million paid by just smokers
to provide uninsured smokers with taxpayer-funded health
care for tobacco-related health problems?
Think about it.
Chip Ford --
PS. Note the change [* in the
AP report, below] of the senate sponsor of our bill: Sen. Bruce Tarr (R-Gloucester) agreed
to file it only "by request of" CLT&G, but not sponsor it. "By request
of a constituent" bills are virtually DOA in the Legislature.
Instead, at the last minute we asked
Sen. Bob Hedlund (R-Weymouth) to sponsor this pro-taxpayer legislation too, he agreed, and
will now carry the bill for us.
Wednesday, December 2, 1998
Tobacco money eyed for other purposes
By Jean McMillan
BOSTON (AP) -- With the ink barely dry on a national $206 billion tobacco deal, some
activists are setting their sights on the millions of dollars expected to flow into the
While Attorney General Scott Harshbarger
and others are saying the money should be used solely for health care and antismoking
purposes, at least one proposal suggests some of it be returned directly to taxpayers.
"This is not found money. This is
money that has been expropriated from taxpayers all along," said Chip Ford, co-director of the Citizens
for Limited Taxation & Government.
The group is behind a bill submitted by
Sen. Bruce Tarr, [*] R-Gloucester, to return the tobacco settlement money to taxpayers
through increases in the personal exemption.
Ford said those who fought for the money
argued it was a reimbursement for money taxpayers spent on tobacco-related illnesses
through Medicaid. So, he said, it's only right the money be returned to them.
Under the settlement agreed to by
tobacco companies and 46 states, Massachusetts is set to receive $7.6 billion over 25
years. Harshbarger has said an initial payment of $98 million is expected in March, with
larger annual payments beginning in the year 2000.
Harshbarger has said he plans to file a
bill that would establish a commission that would make annual recommendations for the
spending of the money. But he said he believed the funds should be used for health care
and antitobacco efforts.
"Ultimately it's the Legislature's
call, but in keeping with the spirit of how this money was obtained, we hope that they
will earmark it for worthy public health goals," said Harshbarger spokesman Ed
Cafasso said he wasn't surprised that
proposals to use the money for other purposes already were emerging.
"We never had any doubts there
would be a feeding frenzy when you're talking about this much money becoming
available," Cafasso said.
Acting Gov. Paul Cellucci said Wednesday
he continues to favor reducing taxes by rolling back the state income tax to 5 percent,
but he doesn't support using the tobacco money to accomplish that.
"I've heard from the attorney
general and I think that he's right. This money should be used for health care and for
antitobacco efforts, and that's what I intend to use it for," he said.
Ed Sweda, senior attorney with the
Tobacco Control Resource Center at Northeastern University, said the settlement may be
considered reimbursement for past costs, but that taxpayers still will have to pay the
continuing costs of tobacco-related illnesses.
"It will be in the interest of
taxpayers to spend whatever money does come in to try to take affirmative steps now to
reduce the toll of tobacco that will otherwise be inflicted on the citizens of
Massachusetts," he said.
November 30, 1998
The Amazing Smoke Screen
- and also -
The Boston Globe
Tuesday, December 1, 1998
A parody of good policy
Tobacco pact taxes poor, offers only modest health gains
By Robert J. Samuelson
We may have closure -- at least
temporarily -- to the antismoking crusade of the 1990s. The agreement between state
attorneys general and the tobacco companies for the industry to pay the states roughly
$200 billion over 25 years may quiet the controversy. If so, this will be the agreement's
main benefit, because otherwise it is a parody of good government policy. It imposes a
steep tax on a heavily poor part of the population; it offers only modest health benefits;
and it deepens popular confusion about the public consequences of smoking.
Let's concede the small possible health
gains. The agreement will raise cigarette prices; tobacco analyst Martin Feldman of
Salomon Smith Barney figures that retail prices will go from an average $2.07 a pack now
to $2.90 in the year 2000. Higher prices might reduce the number of smokers by a few
percentage points of the population.
Let's also note that the agreement aids
the tobacco industry. By reducing the threat of lawsuits, it bolsters companies' stock
prices. Still, the great myth of this struggle is that, just because cigarettes are
unhealthy and the tobacco industry is often dishonest, the people on the other side must
be morally superior. In truth, they - meaning plaintiffs' lawyers, politicians and
public-health advocates - also frequently pursue their goals with a single-minded
dishonesty and hypocrisy. And their motives are often selfish: personal enrichment (the
lawyers); power and popularity (the politicians and public-health advocates).
Little wonder the results are
disheartening. Almost everyone has long known that smoking is dangerous. In 1954, 70
percent of the public thought smoking "harmful" and 42 percent thought it
"one of the causes of lung cancer"; by 1990, these responses were 96 percent and
94 percent. Most Americans also think that smokers decide for themselves whether to smoke.
A 1997 poll asked who is "more responsible for... smoking-related illnesses,"
smokers or tobacco companies. By 76 percent to 17 percent, respondents said smokers.
The debate's central issue ought to be:
How much is society entitled to penalize smokers for their decisions, because those
decisions are deemed unhealthy? Should present smokers be punished (via higher taxes) to
deter future smokers? These hard questions pit Americans' belief in personal freedom
against the desire to protect public health. Precisely because the questions are hard,
antismoking advocates diverted the debate to three other ideas, all dubious.
First, smokers aren't responsible for
their behavior because smoking is addictive.
Second, smoking creates huge social
costs -- mainly higher health spending -- that nonsmokers pay through higher taxes.
Finally, the tobacco industry should be
punished and forced to compensate nonsmokers for smoking's social costs.
Even if smoking is addictive, people can
-- often with much pain and hard work -- break addictions. There are now more ex-smokers
than smokers. As for higher government costs, studies have shown that -- because smokers
die earlier than nonsmokers -- they create savings for government through lower lifetime
health and pension costs.
But suppose smokers lack free will and
raise government's costs. Still, the industry could not pay those costs directly without
going bankrupt. The money always has had to come from smokers through higher cigarette
prices - the equivalent of a tax increase. Antismoking advocates rarely discuss this,
because the implications are devastating. Smokers have low incomes. Only 20 percent of
cigarette taxes are paid by those with incomes over $50,000; 34 percent are paid by those
with incomes under $20,000 and 19 percent by those with incomes between $20,000 and
$30,000. Moreover, smokers already pay steep federal and state cigarette taxes (now
averaging about 58 cents a pack) that more than cover any possible public costs they
As a result, the antismoking crusade
becomes a reverse Robin Hood arrangement: It sanctifies soak-the-poor taxes and robs the
poor to pay the rich. The attorneys general's agreement now enshrines this. The rich, of
course, are the private lawyers who represent the states in their tobacco suits. The
agreement allows up to $500 million in annual fees for perhaps a few hundred and at most a
few thousand lawyers. For how long? Arbitrators will decide. The cigarette dispute has
evolved into a welfare program that may create some instant billionaires and many
Because none of this can be defended, it
is camouflaged. For self-interested reasons, the antismoking advocates never openly
described public choices. Beyond taxing smokers to cut smoking, politicians want to keep
the taxes -- and not to rebate them. Public-health advocates covet extra money for pet
programs; and lawyers crave their fees. All this has involved an adept manipulation of
courts and legislatures. A gullible public -- aided by a pliant press -- embraced the
antismoking hysteria. Because the campaign succeeded, it will inspire assaults against
other industries. We can't tell the target (whether alcohol, or autos or fatty foods) or
the tactics. But it's just a matter of time.
Robert J. Samuelson is an economics
reporter in Washington.
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