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1 J. D. Foster, A Tobacco Deal Looking to the Future 1 (1998)

handle is hein.taxfoundation/tobdeaxz0001 and id is 1 raw text is: FOUNDATION May 1998, No. 9 A Tobacco Deal Looking to the Future By Dr. J.D. Foster Let's review the bidding. The tobacco Executive Director and companies cut a deal with the state attorneys Chief Economist Tax Foundation general. The companies agreed to pay hundreds of billions of dollars in exchange for some limits on their exposure to class action law suits. And the companies essentially waved most of their First Amendment rights. The President, assuming the deal would go through, included the revenues and a like amount of new spending in his budget proposal. Then the Congress got involved and it ground to a halt. What happened? Before you write ojf the tobacco settlement entirely, remember the President still wants a bilL Many in Congress still want a bilL The tobacco companies presumably would still like a bill if it looked much like the original agreement with their legal protections. And there's still all that new federal tax revenue to consider. First, on a bipartisan basis folks in Congress got greedy for political points and revenues. Seeing a legitimate vehicle for beating up on tobacco companies congressional grandstanders went into overdrive. Then, figuring the companies had agreed to a tax hike of one size, some congressional leaders pushed for more. Much more. The tobacco companies were pushed too far and they backed out. Then some Republicans realized that this was an enormous tax hike, whatever label the spin-meisters put on it. The tax increase dwarfed their proposed tax cuts and the remaining revenues were to fund a slew of new government programs. This is not what the Revolution was supposed to be about. A few legislative leaders then realized that the tax increase would hit low and middle- income taxpayers hard. Based on consumption data provided by the Centers for Disease Control the Tax Foundation has calculated that about two-thirds of the tax would be paid by individuals with annual adjusted gross incomes of less than $20,000. Finally, other industries began to wonder who would be next. What if social policy excises became the wave of the future, the beer, wine, and distilled spirits industries worried. How about eggs? They raise cholesterol. How about beef? That's not exactly health food. How about dairy products? High in fat content. Why go part way - how about a general tax on all food products based on their salt, fat, and cholesterol contents? How about computer monitors? They're bad for your eyes. And could a broad-based energy tax be far behind? Where would it end? And so the tobacco legislation stalled, and it may be dead. Some Republicans say they are content to see the bill die because the polls show voters don't seem to care. But just wait until the Democratic National Committee starts running adds in the Fall about how the Republicans refused to protect our children from tobacco. By then, of course, it will be too late for 1998. Before you write off the tobacco settlement entirely, remember the President still wants a bill. Many in Congress still want a bill. The tobacco companies presumably would still like a bill if it looked much like the original agreement with their legal protections. And there's still all that new federal tax revenue to consider. Suppose somebody put humpty-dumpty 11 III1[III III . .. . ... II

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