Smoking Costs 5 Times More Than New Higher Taxes on Wealthy

Jan. 2, 2013 - PRLog -- WASHINGTON, D.C. (January 2, 2013): Although the fiscal cliff agreement to impose higher taxes on those with large incomes is expected to raise some $600 billion over 10 years, this is only one fifth of the money smoking costs our economy each year, so a higher tax on smokers – which would both raise new revenue as well as result in enormous savings as smokers were persuaded to quit – should be considered in upcoming congressional plans to trim the deficit, says the public interest law professor behind the new smoker surcharge included in the Obamacare legislation.

"Smoking costs the American economy more than $300 billion of totally unnecessary expenses each year – most of which is paid by nonsmokers in the form of higher taxes and bloated health insurance premiums – so even a 20% reduction could have a bigger impact than the new controversial taxes on the wealthy," suggests law professor John Banzhaf.

Requiring smokers to pay even one fifth of the costs they now impose on others would raise more than the new wealthy tax, would not adversely affect investment in new businesses, and might seem to be fairer since those paying the tax can escape simply by quitting smoking.

Moreover, since increasing the costs of being a smoker – e.g. from higher taxes – is one of the most effective ways of helping the great majority of smokers who already wish to quit to do so, there would be lasting savings in reduced health care and other totally unnecessary expenses as millions of additional smokers were helped to quit.

The $60 billion a year the higher taxes on big earners is expected to yield is far less than the $90 billion smokers spend annually on their habit. So they can afford to pay additional taxes of $1,500/year – an amount which would raise more than the new high-earner taxes and slash health care costs, says Banzhaf.

At a time when health insurance for a family averages over $15,000 annually, smokers face a 50% surcharge on the cost of their health insurance under Obamacare – but the money goes to private companies rather than to the government to help reduce the deficit, notes Banzhaf.

Legislation directing revenue from the smoker surcharge to the government, rather than to private insurers, would go a long way towards helping to balance the budget, he suggests.

JOHN F. BANZHAF III, B.S.E.E., J.D., Sc.D.
Professor of Public Interest Law
George Washington University Law School,
FAMRI Dr. William Cahan Distinguished Professor,
Fellow, World Technology Network,
Founder, Action on Smoking and Health (ASH)
2000 H Street, NW
Washington, DC 20052, USA
(202) 994-7229 // (703) 527-8418
http://banzhaf.net/ @profbanzhaf