How to make money on peoples' vices: Pennsylvania

The BBQ Pit
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I heard today that the state of Pennsylvania made, get this, $1.5 BILLION dollars in tax money in the past 2 years on the backs of smokers. This tax is purportedly to make it cost-prohibitive for young kids and to keep them from starting to smoke, a noble ideal, but think about it: this state made an absolute fortune that the general public doesn’t have to toss in for on the backs of what are essentially drug addicts. What’s more, if they wanted to make it truly cost-prohibitive they could simply raise the taxes to astronomical levels, and basically force people to quit, but they can’t do that because they are getting fantastic sums of money on peoples’ habits, and they certainly don’t want to lose such a massive revenue flow.

It gets better. Pennsylvania has a state-owned monopoly on alcohol and a draconian liquor control policy (that is admittedly loosening up a bit, after 80 years or so). In order to make money they run specials on products and encourage people to drink more and more while at the same time taking great pains to punish their customers every time they step out of a building with hooch on their breath. They get you at the store and they get you with the fines.

And now for the coup de grace: they are going through the steps to legalize gambling in the form of slot machines. To start. Why? Because the proceeds will allegedly go toward reducing the property tax statewide. I say allegedly because the Legislature can pretty much change their minds at any time how they want to spend it, just as they did with the tobacco settlement money years ago.

What kind of a state is this that it benefits so handsomely from vice? It is in their own best interest to push booze and gambling, and I can pretty much guarantee you that they will be manipulating the smokes tax to maximize earnings. Of course, they are also responsible for the damage caused by such vices, but even as I say that I note that it is perhaps the most cynical thing imaginable that the very people that benefit from your vices are the people treating them.

Where did we go wrong here? When you stop to think about it this is utterly outrageous. And this is just one state, example 1 of 50.

What the hell is wrong with us? When did it become acceptable to basically use people as income sources like this? I find it to be absolutely reprehensible.

2

I believe the Pharaohs had special taxes for beer. I suspect sin taxes are almost as old as taxation, if not quite so old as sin ;).

  • Tamerlane
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The more inelastic the demand for a good, the less distorting of the market from a tax. Vices are fairly inelastic, and compared to other generally inelastic goods, like food and clothing, vices do not wander into the necessity range.

Do you recommend a different source of revenue?

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I’m absolutely amazed how much money I don’t spend since I quit smoking. I never used to have money in the bank by payday and I’ve consistently been leaving a cushion since the day I smoked my last one.

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From a libertarian point of view, those taxes could actually be a good thing. They make it much more difficult politically to try to ban those things because of the loss of money that would result. They can make a persuasive argument for legalizing ones that are banned (such as gambling)- would Pennsylvania have legalized gambling if they didn’t expect to make money off of it?

As someone who thinks that all vices that don’t directly harm another person should be legal, of course my ideal situation would be that they would be legal and untaxed. But I’d much rather have them legal and taxed than illegal.

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They’ve got to get the revenue from somewhere. Whether it comes out of income taxes, property taxes or sin taxes, it comes from the people.

By taxing things like cigarettes, booze and gambling, you can be extra sure you’re getting the money from people who apparently have it to spare.

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Pennsylvania: America Starts Here!
Eh, I were in charge, I’d do the same bloody thing. Tobacco and booze are big money; why not cut a piece of the pie for the good of the state? My pop used to work for the liquor and tobacco control board…he said it was an uphill fight, much of the time. So why not let the bloated beasts work FOR us and hope that the money will be funneled into something beneficial? As for slots…they’re pretty harmless, IMHO.

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Since the dawn of civilization. The people have always been a source of income for the ruling class/government in one way or another. Only nowadays, they don’t generally execute you if you can’t pay. This is progress.

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Why tax sin? Because you can divide and conquer.

If you raise property taxes, income taxes, and/or sales taxes, you will be affecting many more people than a rise in cigaret taxes or any other single vice (with the possible exception of liquor). Unless >50% of the voting public smokes, it is a smarter move politically. At election time you can trump the increased revenue and reduced health care costs, a win-win. Raise income taxes and you might as well pack your bags the 4th week of October.

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Pennsylvania will have it made when officials figure out an acceptable way to legalize prostitution and cash in on that income source.

I can see the ads now - “You’ve got a friend in Pennsylvania (nudge nudge wink wink).”

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Yeah. Rather than giving the dick to addicts, how about we share the bill? Either that or give your thanks to every smoker, drunk, and compulsive gambler in America for easing your tax burden.

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Are there any reliable numbers about how much smokers cost taxpayers? I mean if you add up increased medical costs to medicaid recipients and lost wages of government employees due to increased illnesses that smokers endure, does this wash with the 1.5 billion being taken in?

(I don’t know the answers to the above, I’m just throwing this out there.)

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Oh, I do.

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A smart one.

Vote Democrat and they’ll take it 10 steps further. The only bad money to a Democrat is money that they don’t get to take from you.

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It also helps to adjust for an externality. The cost to society from cigarette smokers is pretty large when you factor in rising health care costs, second hand smoke, et al.

Now, obviously this money that is taxed on cigarettes doesn’t go directly to deal with that, such matching of costs is too logical and honest for any sort of government. But it does add money to the government coffers that helps to offset some of the economic damages of smoking.

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:smiley: As someone who riefly had my legal residence in PA (York) in the mid-80s, I kinda figured out what this thread would be about even before reading it.

But really, Doors, every polity with the authority to tax does a variation on this at some point or another. It started with the Sumerians, IIRC, who had “fertility priestesses” whom you could patronize in exchange for, um, a modest donation to the temple fund.
Most of my life I’ve been a resident of either PR or MD, and neither has a monopoly on booze – they just take a cut off of the sales in private business. If it isn’t lottery and ABC stores it’s horse tracks or pachinko parlors or licensed brothels. Heck, here in PR we’ve pretty much always had a lottery AND casinos AND O.T.B. and even legal gambling on cockfights (the Americans tried to “clean us up”, Protestant-style, after 1898, but by the 1930s had given up…)

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Dear jayjay,
Congratulations on quitting smoking. We do miss the wad of money, so if it’s all the same to you, please send us just the tax portion, OK?
Your friend,
Ed Rendell

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Here in Mississippi the Governor just vetoed a raising of the cigarette tax. Currently the tax is the fourty-ninth highest in the land. It was combined with the elimination of the sales tax on groceries, which is seven percent. It may get overridden, however. Of course, the state lost a huge amount of tax revenue when the casinos on the coast were destroyed, and the state has a liquor monopoly so we’re hardly opposed to sin here.
This is hardly new, I remember reading that the state tax commissioner here was once the highest paid official in the nation. The reason being, his salary was actually a percentage of what the state collected on taxes. The largest part of his salary came from a tax on alcohol. Of course, alcohol was illegal statewide at the time, so the tax commissioner earned most of his money from an illegal trade.

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I’ve been railing about this so long I’ve just given up. My taxes are funding health care for the poor/children/homeless/etc. The taxes, I’m told, are fundamental to the health care of those that can’t afford insurance.

Fine. I’m not for national health care, but it doesn’t seem unreasonable to treat a kid for bronchitis because his parents are too fucking lazy to work. (Yes, even Taco Bell offers health insurance.)

It wouldn’t bother me to have a reasonable tax on tobacco so long as it goes toward what it’s proposed as. Some states pilfered billions from the tobacco companies for health impact costs, then went ahead and increased taxes because the tobacco money was spent elsewhere all in the name of tobacco being evil.

Not one fucking state banned this insidious curse upon mankind. And, shockingly, we haven’t heard of calls for bans from the Lung Assoc, American Heart Assoc., Stroke Society, etc, etc, etc.

It’s all money. It ain’t about the children. It ain’t about the bartender. It ain’t about the coffe house waitress.

It’s money, honey.

My company increased health care premiums for smoking this year 20%. They didn’t give a reduction to non-smokers (The Good People), they increased the cost for people simply enjoying a legal product and paying a heft of taxes for doing so.

They didn’t increase the cost for people in “groups” that have shown to be at higher risk for diseases that require expensive drugs and therapy. Diseases that can be quantified and proven with no doubt to anyone.

Nope. It’s the dirty smoker.

The smoker that complains every now and then only to get shouted down by the Good One’s. We’re reminded that we have no say in being singled out in taxation, health care and even employment.

We get penalized a surcharge at the drop of a hat, we are charged more in health care while doing nothing wrong, and we can actually become unemployed for doing nothing illegal. And we get nothing but dirision when we speak out about it.
I become more and more sympathetic with some groups every day.

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duffer, I’m not real clear on who you’re sympathetic to??? I’m reading the rant and it seems to me maybe you’re a smoker and complaining about getting penalized for doing something legal?