Obama Raises Taxes on Poor to Pay for “Free” Child Health Care

Posted by Enrique on 02.06.2009

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On Wednesday, President Barack Obama signed a bill that extended the State Children's Health Insurance Program (SCHIP) to millions of underprivileged children. At a time when the federal government is running record deficits, the cost of the SCHIP bill will be borne by society's favorite pariahs, cigarette smokers:

The Congressional Budget Office says the bill will enable states to cover more than four million uninsured children by 2013, while continuing coverage for seven million youngsters. The bill will increase tobacco taxes to offset the increase in spending, estimated at more than $32 billion over four and a half years.

The federal cigarette tax will increase to $1.00 per pack from 39 cents, meaning that a box of my mentholated Marlboro Ultra Lights will now cost about $5.70 in the state of Wisconsin, or 28 cents per five-minute break. Since Obama himself is a longtime (possibly former) cigarette smoker, this is a particularly galling action. Have you already forgotten where you came from, Barack? For shame.

Although raising cigarette taxes is a fairly standard political maneuver, it bears repeating that tobacco tax hikes disproportionately affect economically disadvantaged Americans – exactly the people Democrats claim to represent. This press release from Americans for Tax Reform provides some useful statistics (I have no idea where these numbers came from, but since they support my argument, let's imagine they're 100% authoritative):

Shouldering the burden of this tax increase are the middle- and low-income Americans Obama said he would not raise taxes on:

• 55 percent of smokers are "working poor"
• One in four smokers live below the poverty line
• On average, smokers, whose median income is a little more than $36,000, make about 30 percent less than non-smokers.

When conservatives advocate tax cuts, Democrats criticize them for favoring "tax cuts for the rich" because high-income earners receive the largest benefit in raw dollars. With that in mind, it seems fair game to criticize Democrats for paying for their Big Government programs by screwing economically vulnerable Americans. Although cigarette tax hikes usually lead to a reduction in smoking, that reduction is typically among the wealthier segments of the population. A 2007 study by researchers at the University of California indicated that low-income Americans make up for the increased costs by restructuring their budgets:

"The only people left smoking are those who are addicted," [study author Dr. Peter Franks] said. "What do they do if the price of the drugs they are addicted to increase? Do they stop? No. They cut other things out or find other ways to fund their habit."

He added that using such taxes to pay for a social program such as SCHIP is patently unfair.

"If we think about expanding SCHIP, really shouldn't everyone pay for it?" he said. "Why pick on smokers, who are more and more becoming a poorer segment of society?"

President Obama is surely well-informed enough to know about the demographics of cigarette smokers, which raises the question – do Democrats merely dislike poor people, or do they hate them?