http://www.medicalnewstoday.com/medicalnews.php?newsid=61633&nfid=rssfeeds
This article is based on the recent increase Gov. Doyle proposed for the cigarette tax in Wisconsin. Doyle said he would support the increase only if revenue earned (estimated to be $197.6 million/yr) is used exclusively for smoking-related health services. For lawmakers to get Doyle to remove this proposal from his spending plan, they will have to make cuts to offset rising health care costs.
This article reminded me of a segment in Naked Economics specifically about the effects that taxes on undesirable activity have on the economy. Lawmakers try to make these taxes seem spectacular, because not only do they reduce the number of people doing them, but they also help with paying for health care costs of treating the after effects, like cancer. However, by using taxation to promote a healthy lifestyle, we are increasing the life span of many individuals. If they are living longer, then they are benefiting from Social Security longer and living in nursing homes for less time. Also, when people stop smoking, which is bound to happen with an increased tax, the revenue gained from the tax is going to drop each year. Smokers can also find ways around the tax. Many individuals will go to other states where taxes are lower or turn to internet vendors or, if they are really addicted, the increasing black market.
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2 comments:
Excellent points! There are always externalities to things - unintended consequences to actions.
I always think of the example from the book where a group had a fit because kids were being hurt on airplanes without booster seats. So they had this big ole thing where now a kid has to have a booster seat (like a car seat) on any airplane. This meant that parents had to buy extra tickets for kids of any age. So...they stopped buying plane tickets and drove instead. More kids are killed in auto accidents than plane accidents, so their intention to save/protect more kids actually caused more kids' deaths/injuries.
Go figure.
excellent job!
Smoking is pretty addictive...if i was addicted I'm not sure even a tax increase would STOP me from smoking. But prevention in the future? Oh yea! People will think twice about buying a pack of cigs when they cost an enormous amount of money!
p.s. amazing ap econ blog? AMAZING? thats a strong word...i dont think my blog is amazing. way to go KB!
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