January 2, 2009
Tax Foundation Cigarette Tax Study Cited in Washington Times Op-Ed on SCHIP
By Phil Kerpen
The vehicle is a bill to reauthorize the State Children's Health Insurance (SCHIP) program, and while we don't know details yet we can assume it will be similar to last year's version, which increased funding $35 billion and expanded coverage from children in families making less than twice the poverty level up to three or even four times the poverty level. This expansion is financed by raising the federal tax on cigarettes from 39 cents per pack to $1 per pack, a 156 percent increase, and raising taxes on other tobacco products by a similar percentage.
This tax hike would wallop the poor. An analysis by the Tax Foundation found that cigarette taxes hit the poor harder than any other federal tax, hitting the bottom 20 percent, 37 times harder than raising the same amount of revenue from the income tax, because while the income tax falls mostly on people with higher incomes the cigarette tax falls heavily on less affluent Americans.
