Legal Commentary

N.B. This post is by Stephen D. Sugarman, new grandfather and the Traynor Prawf at UC Berkeley Law.



To help fund health insurance for children in working-class families, Congress just raised the federal cigarette tax from $.39 a pack to slightly over $1/pack. Both the tax and spending sides of this measure will improve the health of Americans. Future tobacco taxes, however, should be designed to even out the variation that exists from state to state. Ten states currently impose less than 50 cents-a-pack taxes, while 10 other states tax cigarettes at $2/pack or more.



A good way for the federal government to reduce this difference is to follow the strategy used to fund unemployment insurance. Congress could enact a new $2/pack federal cigarette tax that would be waived if a state?s own tax were at least $2. Surely low-taxing states like Kentucky, South Carolina, Missouri, and Mississippi would prefer to increase sharply their own taxes than have their smokers taxed anyway and the money go to Washington.

Lots of empirical studies show that these higher cigarette taxes would help reduce smoking rates in what are currently low-tax states -- most of which, like those listed above, now have among the highest smoking rates in the country.

The new revenue would help those states pay for smoking cessation programs and health care for indigent adult smokers (which might be mandated by the federal government). Furthermore, reducing the state-to-state tax differential would help shrink what today is a moderate but growing problem of interstate tobacco smuggling.

Beyond that, an assured nationwide minimum tobacco tax of $3 a pack would bring the U.S. closer toward compliance with the Framework Convention on Tobacco Control, the international tobacco treaty already adopted by most nations and which, it is hoped, the Obama Administration will soon convince the U.S. Senate to ratify.