New York City mayor Bill de Blasio has proudly announced that his administration is planning to raise taxes on cigarettes in order to make the base price $13.00 a pack, the highest in the nation. This is a terrible idea for a host of reasons. Even at the already exorbitant current base price of $10.50, the city is full of bodegas selling bootlegged $8.00 packs shipped in from states such as Virginia where taxes are low. Another price increase will only boost sales for these illegal operations. It is also an obviously regressive tax that will punish poor and middle class New Yorkers who choose to smoke.
But setting aside these concerns, there is a broader question at stake in Gotham’s skyscraper-tall smoking tax. Should the government use the tax code to modify the behavior of citizens in a free society? The primary purpose and justification for taxation is that government provides essential services that must be funded. Should the government’s obligation be to meet its funding goal as efficiently as possible — or to punish behavior it finds undesirable?
In examining this question, one thing is clear off the bat. The increase in the cigarette tax is not a measure meant to close some gap in the budget. Its purpose is clearly to dissuade people from smoking. Which is to say that its purpose is to interfere with and undermine commercial transactions between tobacco sellers and buyers.
If the state has an interest in making a product illegal because it is dangerous, it may do so. In New York City, you may not purchase marijuana or cocaine legally. But you may purchase cigarettes. If the danger of smoking doesn’t rise to the level of banning it, why does it rise to the level of punitive taxation? This is not a luxury tax per se; cigarettes are actually a product that traditionally have a low price point. Even the most exclusive brands cost only a few dollars more per pack than generic brands.
Furthermore, there are serious questions as to just how effective this excessive taxation really is. In Denver, for example, the average price of a pack of cigarettes is about $6.00 and the smoking rate is just under 16 percent of adults. In New York City, the average pack costs over $12.50, but the smoking rate is 14.3 percent. That is more than a 100 percent difference in cost to produce just a two point difference in the number of smokers.
For a pack-a-day smoker, this difference in cost amounts to over $2,000 a year — and this is a tax that is blind to the income of the payer. Can such an enormous tax liability be justified for just a 2 percent difference in the smoking rate? Or is something else going on here? Is government moralizing — telling us how we should behave, what risks we should take, and how we should live through the tax code?
For every smoker who quits because of excessive taxes, there are myriad more who will be paying an unfair share to fund the government.
It is moral disapprobation, not sound policy, that leads to astronomical taxes on smoking. Smokers are viewed as self-abusive and morally deficient. But smoking isn’t the only activity that kills and injures people. By the logic of mega taxes on cigarettes, why not raise speeding tickets 100 percent or why not add a 100 percent tax to Big Macs? Why not impose harsh monetary penalties on people possessing small amounts of hard drugs?
One can easily imagine a society in which every activity people enjoy that runs afoul of the government’s sensibilities is hyper-taxed to engender conformity to the state’s desires. But this should not be the role of government. When needed, the government may ban substances, but what it shouldn’t do is engage in social engineering through the tax code.
For every smoker who quits because of excessive taxes, there are myriad more who will be paying an unfair share to fund the government. But Mayor de Blasio doesn’t seem to be concerned about that 14 percent of his fellow citizens. He would have us pay through the nose — all because he thinks he knows what’s best for us.
That is not how things work in a free society. In a free society, taxes are not a cudgel with which to punish the morally suspect; they are a means to fund the government. Everyone makes bad decisions and dangerous choices at some point in their lives. But we don’t need tax collectors monitoring our behavior. There are effective means by which cities can assist smoking cessation. Excessive taxation, however, isn’t one of them. It’s unfair, overly burdensome, and too strong of a state arm reaching into our lives.
— David Marcus is a senior contributor to the Federalist. He is also the artistic director of Blue Box World, a Brooklyn-based theater project.