Please note that my opinions are my own, and the opinions of the anyone or any institution quoted are theirs. The opinions expressed herein do not reflect the opinion of North Carolina State University, its board of directors, the College of Management or any other college, Student Media Authority, or WKNC Raleigh.

Monday, September 12, 2005

A More Dangerous Addiction: Taxes

Tonight I was introduced to a new concept, something that had previously not come up in any economics course I've taken so far.

Tax Addiction, when googled, returns the following article:
"If California lawmakers don't want people to smoke, why are they tying the state's budget to smoking? Democrats seek to close the state's $24 billion deficit through the servitude of smokers. Democratic Party leaders proposed this week a steep increase in cigarette taxes -- from 87 cents to $3."

Tax Addiction is simply a condition of federal governments that they tend to cycle taxes aimed at reducing negative externalities of consumption and production into their fiscal budgets from year to year, thereby sending a mixed message to constituents and those affected by the taxes directly.

On the production side: the U.S. government, through its arm labelled the EPA, mandates certain levels of abatement (that is, anti-pollution or pollution-reduction) that certain industries must follow or face per-unit taxes on products. A company will then reduce pollution of its own accord until the cost of producing the next unit of abatament (known as the marginal unit) exceeds the value of the per-unit tax. In this way the government intervenes to fix a market failure, namely to lower pollution.

With industry being what it is, and a large economy that easily processes hundreds or thousands of trillions of dollars each year, substantially revenue stands to be gained from taxing polluting industries. Oh, goody, more money for the government to spend. If I'm starting to sound conservative, its because I'm a conservative economist.

In much the same way, the government taxes cigarettes in an effort to reduce the number of smokers (particularly underaged smokers), and perhaps thereby reduce the number of smoking related deaths and/or lawsuits continually going through a revolving-door legal system. Tobacco is bad... boooooooo tobacco.

Oh, wait, they get tax revenues from that don't they? So they don't wish you to stop smoking cigarettes completely, they just want to make the few that remain on board pay like hell for a few of the cancer sticks. Because gub'ment needs da munny, hunny.

So, I now must disclaim: I do not endorse cigarette smoking, nor do I promote underaged drinking. But, if you wish to enjoy a fine pipe tobacco or cigar with an exquisite merlot, you will be tasting the best life has to offer and likely would have the best sensory experience a man or woman can obtain with legal "drugs." That doesn't mean you should smoke to get a nic rush or drink a keg of beer and get wasted. MODERATION is the key (see previous entry).

Which is worse: The smoker that "pollutes" the voluminous air that each of our cars graciously scurbs clean for us (snicker), or the government that vehemently opposes the devil-weed while quietly accepting a bribe to GRANT you a RIGHT?

Any strict constructionists care to comment?

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