Taxing cigarettes

I don’t smoke, nor do I condone smoking. It’s a disgusting habit that I managed to completely quit  two years ago, and I don’t expect to ever start again. I also am not a big fan of taxing those that cannot otherwise seek meaningful treatments to quit smoking.

The Healthy Wisconsin Council, a council to address health care and other health issues, recently recommended increasing the state’s cigarette tax by $1 per pack to cover costs for increased health care costs, new health care programs, and anti-tobacco education.

Senator Mike Ellis (R-Neenah) opposes this, stating his press release:

“While a huge tax increase in cigarettes may pay off in the short run, over time as fewer and fewer people smoke, those revenues will taper off but the programs they support will continue to increase in cost.”

The senator is correct to a degree. But I urge all of the legislators out there to consider the goal of the tax. Is it to increase revenues for a new program? Is the program truly related to helping smokers quit, or are there other motivations behind increasing revenues? Or is it really to “encourage” smokers to quit?

The statistics indicate that when cigarettes cost more, less people smoke. Additionally, those that do smoke add greater costs to the health care cost burden because of the complications that are related to continuous bodily damage. But the statistics do not show the powerfully addictive nature of quitting smoking. I’ve heard from others that they found it easier to quit heroin or alcohol than to quit smoking.

Four years ago, the state used money from a tobacco lawsuit to plug a hole in its budget deficit. The money was intended to help people quit smoking. It certainly was not a self-sustaining fund, but it was large enough to help many fund programs that could help smokers kick the habit. Now that the money is gone, we need to know if the increased cigarette taxes will be used only for these purposes.

I liken this to what happened in the City of London when it imposed a toll for vehicles to enter. At £5 per vehicle per day, the city hoped to increase revenue while also decreasing motor vehicle traffic. Because the public was really upset with the cost, the city ended up only seeing traffic decrease; the last I read, the city did not raise the revenues it expected.

I agree with Senator Ellis’ point on increasing taxes for the sake of starting a new program. It’s irresponsible, and there is plenty of evidence that shows why it doesn’t work as a long-term solution. If it is used as a way to cover increased health care costs because of the burden of smoking, then we could be sending the wrong message to the health care companies: we are willing to pay increased costs. I don’t agree with that either. If we are using the funding to help smokers quit, then we are forcing them to subsidize their own programs, and I’m willing to accept that. Again, legislators need to seriously consider the true motivation for these increases before making their final decisions.

Ellis Blasts Call for Cigarette Tax Hike

Milwaukee Journal Sentinel article: Cigarette tax increase has support in Senate

Milwaukee Journal Sentinel editorial: Taxing what kills us

Milwaukee incomes flat while Madison incomes soar

The following article has some interesting perspectives on the economies between Milwaukee and Madison. What I find interesting is that these two cities, only 75 miles apart, have different economic bases. Madison is known for its academic university, its research facilities, its high-tech base, and the seat of the state’s government. Milwaukee has traditionally been a manufacturing city, but has also attracted some major service-based industries.

Milwaukee’s demographic has a strong tie to manufacturing. I think that it needs to move forward with re-educating its residents and trying to attract high-tech and service-based industries. Milwaukee has a wonderful culture and many wonderful features that should attract businesses, and the city really needs to play those up.

Milwaukee Journal Sentinel article: Income gap widens

More on sales tax initiatives

If there is one thing to be said about sales tax, it’s that people really don’t like them at all. As I’ve stated, I’m no major fan of them either. Although the following editorial voices opposition to Senator Erpenbach’s (D-Middleton) proposal to re-evaluate and expand the sales tax, it does offer another viable option: join the Streamlined Sales Tax Project.

Wisconsin reported significant decreases in sales tax collections just a few years ago when the shopping on-line took off. This proposal does not introduce new taxes, but instead enforces the current tax laws. I think it makes perfect sense for Wisconsin to pass legislation to adopt this initiative. In the long run, it will help reduce the overall state tax burden. But I still also encourage the Legislature to review the current sales tax exemptions for frivolous goods and services.

Wisconsin State Journal editorial: Reject expansion of state sales tax

Milwaukee Journal Sentinel: Doyle urges uniform sales tax rules

Taxes worth review and debate

I’m about as big a fan of taxes as the next person. Paying more in taxes means more out of my pocket for other things. But if it also means equalizing the playing field, reducing the overall tax burden on citizens, and restabilizing the state’s financial budget deficit, then I think it’s worth a discussion.

Senator Jon Erpenbach from Middleton proposes shifting existing sales tax exemptions to take away exemptions from certain services and providing them to others so that more revenue can be generated. Some “necessities of life,” such as food and medical care, would continue to remain exempt. But others, such as architectural services, public relation firms, and hair salons, would have to collect sales taxes.

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The wrong approach to solving gas prices

Wisconsin Congressional Representative Ron Kind is not wrong in asking why gas prices are high now. Neither is Republican Party Third Congressional District Chairman Gary Arneson. However, Arneson suggests that Kind is wrong by looking at alternative energy sources. Furthermore, he blasts Kind for voting against drilling in the Arctic Circle for more oil. That is extremely short-sighted of Arneson.

Arneson’s argument has major holes. First, alternative energy sources for powering our homes affects fuel prices. By using less fuel in power plants, producers can provide more to motorists. We see prices change with the seasons because of production of facility (homes and businesses) heating fuel. That same fuel comes from crude oil.

Second, crude is a limited resource. By drilling for more of it, we’re only postponing the problem. Former President Jimmy Carter proposed looking for alternative fuel sources over two decades ago when people were literally sitting in line to put gas in their cars. Instead of becoming more independent of fuel, we Americans entered the 1980’s with a new “manifest destiny” mentality, thanks to President Carter’s successor killing the alternative energy program. We started buying vehicles (that is, sport utility vehicles) that consumed more gasoline, and when the industry responded with vehicles that guzzled more fuel, we bought more of them (like anyone would need a Mercedes-Benz or Cadillac SUV). We are only now reacting to the prices when we should have been actively looking for alternatives more than 20 years ago (and who says history does not repeat itself).

Third, our wasteful consumerism has driven the price of crude oil to skyrocket. The United States now relies on foreign manufacturing, and foreign manufacturing relies on fuel to power their plants. Because the finite supply continues to decrease and the demand across the planet continues to jump, economic supply and demand kick in and require costs to go up. As I stated, drilling for more oil is merely a temporary solution. Once all of the fuel is used up, what do we do then?

Finally, Arneson argues that wind power, solar energy, and ethanol cannot be quickly integrated into the economy, so we must remain dependent on gasoline. But he fails to mention that this technology is not new. Ethanol has been available for over two decades. Wind power was used in Europe in the form of windmills when the Native Americans were the only people on this continent. And solar collector technology continues to move forward as researchers develop more economical ways for it to be used in many parts of the western United States.

These arguments are not new. They’ve been around since the last fuel crisis. As a nation, though, we just decided to ignore it and focus on our own grandiose ambitions instead of acting as proper stewards of the world (since we have the power to). But any person with an ounce of intelligence and some awareness of recent events does not have to read this to know the facts… they merely need to look at the historical record to find that out.

Republican Party of the Third District of Wisconsin press release: Gas Price Solutions Elude Ron Kind

Wisconsin’s iPod tax proposal dies in 2005-07 budget

Last week, the Wisconsin Joint Committee on Finance rejected the idea of charging a five-percent sales tax on media downloaded from the Internet. Representative Scott Jensen (who’s already in hot water for illegal campaigning activities) spearheaded the charge against this tax. I already stated that I supported this tax, since I already report my online purchases on my tax forms. That won’t change with this action (call me what you will, but at least I can sleep at night). What really bothers me is that the “iPod tax” is considered a new tax. When I buy a CD at the Exclusive Company, I pay a sales tax on it. So why not also pay the same sales tax for the same product in a different (read nonexistent) package? Again, Representative Jensen is feeding us with a deception of Governor Doyle’s intent.

The Committee also rejected a proposal for Wisconsin to join in an effort with other states to streamline a sales tax collection mechanism. According to the Milwaukee Journal Sentinel, “Assembly Republicans objected to the plan, which would set national standards on taxable and tax-exempt items, because it would result in $19.3 million more in sales tax collections, Kaufert said.” Well if this state cannot get out of its budget deficit that Representative Kaufert’s political party’s former champion Governor (and former US Department of Health and Human Services secretary) got the state into in the first place, heaven forbid that it collects more tax revenue to aid in controlling the deficit. I had hoped to find more of a statement than that, but apparently that’s all I have to work with, and that doesn’t exactly make him a financial genius in my book. It’s an obvious case of those that can buy online don’t have to pay their fair share of taxes, and the poor get screwed because they don’t have the same opportunity… that only helps to show that Wisconsin’s sales tax practices are regressive.

Finally, the Joint Committee on Finance also managed to cut the landfill tipping fee from $3.00 per ton to $2.25. If passed, this would mean that other states that have not yet passed recycling laws (such as Illinois) would have no incentive to start seeking one now. Wisconsin citizens would then need to step up efforts to recycle more. We would also lose revenue; we’re essentially giving a price break to other states for bringing their trash into Wisconsin. Wisconsin already has recycling practices that have been increasingly expensive for the State and its citizens. When the law was passed, the intent was to develop markets to utilize the materials. The markets never materialized, new manufacturers never installed recycling equipment required by law, and other states continue to dump their trash in Wisconsin.

Milwaukee Journal Sentinel Online article: Committee rejects Doyle’s download tax

A billion here, a billion there…

A friend sent the following web site address. It’s interesting how we can justify bailing ourselves out of a foreign mess, but we can’t help our own states when necessary. As the site states, “$87 billion is more than all of the states’ current budget deficits, combined. $87 billion is more than twice the amount we’re spending on Homeland Security.” Please note that this was originally posted in 2003. If we knew then what we know now, would we have considered this expenditure justifiable?

Crunchweb: $87 billion