What does children’s health insurance have to do with tobacco tax? That is the question some policymakers are asking as new revenue is sought for the State Children’s Health Insurance Program (SCHIP).
SCHIP, a national government entitlement program that provides health insurance to children whose parents do not qualify for welfare but are unable to afford private health insurance, is supposedly in need of additional funding. A few months ago, you received a Research & Commentary package from The Heartland Institute outlining the myriad reasons SCHIP needs reform, prompting a discussion that concluded if the program were refocused on its original intentions, additional sources of revenue would not be necessary.
Nonetheless, some lawmakers are moving forward to seek out new money for the program. One idea currently being offered is particularly disturbing: raising SCHIP revenue by increasing the federal excise tax on tobacco products.
In this R&C, new from The Heartland Institute, you will learn:
- Taxes on tobacco products are already high, and structured in such a way so as to be not only unfair to smokers, but also (and especially) to the poor;
- Tobacco taxes are, by their nature, a declining source of revenue, thanks to government’s insistence that the number of tobacco users decrease. Ironically, governments continue to rely upon the revenue generated from this dwindling group of taxpayers; and
- Raising taxes to fund a program whose funding allocation is already misspent is not sound public policy. For example, some states allow SCHIP participation for families with incomes up to $72,000 — and 14 states allow adults to participate.