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1 Gerald Prante, Options for Funding SCHIP Expansion: Cigarette Taxes Least Defensible Alternative 1 (2007)

handle is hein.taxfoundation/ffjcxz0001 and id is 1 raw text is: July 13, 2007 Options for Funding SCHIP Expansion: Cigarette Taxes Least Defensible Alternative by Gerald Prante Fiscal Fact No. 92 This past week, Senate negotiators agreed on a bill that would increase the federal cigarette tax by 156 percent (from 39 cents to $1.00) in order to raise $35 billion for the popular SCHIP program that gives federal money to states for children's health insurance. SCHIP is set to expire at the end of fiscal year 2007 (Sept. 30). Unfortunately, this proposal is an abuse of sound tax and fiscal policy. A politically popular, expensive program should never be funded by a small, low-income minority like cigarette smokers, even though smokers are politically unpopular. As Table 1 shows, no other federal tax hurts the poor more than the cigarette tax. Other taxes the federal government could use to raise $35 billion are displayed by income class. Table 1 Cigarette Taxes Are the Most Anti-Poor Method of Funding S-CHIP Taxes that Could Be Used to Raise S35 Billion to Fund S-CHIP Expansion (verage Tax Increase per Household in Quintile) Cigarette Alcohol'. Corporate Payroll Individual Household Income Tax Tax Gas Tax 'Air TransportIncome Tax Tax Income Tax Quintile Increase Increase Increase Tax Increase Increase Increase Increase ll Households $309i $3091 $309' $309 $309 $309 $309 Bottom 20 Percent $249 $142 $100 $62 $39 $41 $7 :Second 20 Percent $330Z $214,. $199 $148' $143 WU $62i Middle 20 Percent $359J $312. $294' $236' $248i $2971 $163i ,Fourth 20 Percent $336J $423 $414' $423' $414i $4691 $348i Top 20 Percent $291 z $589: $713' $901, $944 $806 $1,277 :Source: Andrew Chamberlain and Gerald Prante, Who Pays Taxes and Who Receives Government ':Spending? An Analysis of Federal, State and Local Tax and Spending Distributions, 1991 - 2004, Tax Foundation Working Paper, No 1.

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