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1 Gerald Prante & Curtis S. Dubay, State Tobacco Tax Rates Have Skyrocketed since Last Federal Tax Increase 1 (2007)

handle is hein.taxfoundation/ffjdxz0001 and id is 1 raw text is: FOUNDATION July 13, 2007 State Tobacco Tax Rates Have Skyrocketed Since Last Federal Tax Increase by Gerald Prante and Curtis S. Dubay Fiscal Fact No. 93 There is a proposal before Congress to raise the federal cigarette tax from its current rate, 39 cents per pack, to $1.00. To justify such a large leap, 156 percent, some have argued that because the rate has been the same for five years, its real value (adjusted for inflation) has fallen. To say the least, this is a strange argument, considering how rapidly state cigarette taxes have risen during those five years.Thirty-six states have increased cigarette taxes since 2002, some more than once. The trend is not slowing, as five states have already increased their tax in 2007. 1 State lawmakers have often used a legislative trick to enact steep tax hikes on tobacco: linking a cigarette tax hike to a popular spending program that they want to take credit for. Usually the spending program has nothing to do with smoking. This is exactly what is happening at the federal level now, as Congress proposes to link cigarette taxes to a popular health insurance program, the State Children's Health Insurance Program (SCHIP). Table 1 presents the average total tax rate per pack of cigarettes each year from 2002 to 2007 at both the state level and federal level. While the federal tax has remained unchanged, states have continued to raid the pockets of cigarette smokers. Table 1 Cigarettes Taxes Have Skyrocketed Since Last Federal Tax Increase Average State-Level Federal Total Year Tax per Pack Tax per Pack' Tax per Pack 2002 $0.67 $0.39'. $1.06 2003 $0.71 $0.39'. $1.10 2004 $0.79Z $0.39 $1.18 2005 $0.89 $0.39 $1.28 2006 $0.99 $0.39 $1.38 2007 $1.031. $0.391 $1.42i Note: The state average is weighted according to the number of smokers residing in each :state. Sources: Centers for Disease Control, Census Bureau, CCH, and Tax Foundation calculations

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