A tax hike on tobacco and nicotine products is against President Joe Biden’s tax pledge and whether you're a user or not, it’s a regressive plan that may be short-lived.
The House Democratic Caucus advanced a $3.5 trillion tax legislation on Sept. 13 including a tax increase on tobacco, nicotine and vapor products, according to a Sept. 16 Tax Foundation article.
The Tax Foundation is the nation’s leading independent nonprofit that informs tax policy at the federal, state and global levels, according to its website.
This shatters Biden’s promise to not raise taxes for those earning less than $400,000 a year.
Biden enacted a tax policy which was signed into law on March 11 that guarantees only those with a $400,000-or-more income will receive tax increases, according to an April 13 article by Investopedia, a New York based financial website.
In part of his “Build Back Better” program, Biden focuses on ensuring corporations and wealthy individuals pay their fair share in his tax plan, according to a March 18 CNBC article.
However, tobacco and/or nicotine usage isn’t a “rich-people thing” and most of its users live below the poverty line.
The U.S. Census Bureau reported $17,420 as the nationwide poverty guideline income in two-member households and $21,960 in three-member households in 2021, according to the Assistant Secretary for Planning and Evaluation website.
The Assistant Secretary for Planning and Evaluation advises the Secretary of the U.S. Department of Health and Human Services on policy development in health, disability, human services, data and science, according to its website. It also provides advice and analysis on economic policy.
People who live below the poverty threshold and have lower levels of educational attainment experience higher rates of cigarette and tobacco use compared to the general population, according to the Centers for Disease and Control Prevention’s (CDC) Smoking and Tobacco Use website.
To put this into perspective, 21% of Americans who make less than $35,000 per year are smokers, according to the same CDC webpage.
I’m not saying that using tobacco or nicotine products is good, but this tax increase will affect those who are trying to quit cigarettes, which are the most harmful, by using vapes as the alternative.
Vapor products including electronic cigarettes are less hazardous than traditional combustible tobacco products. They assist smokers in quitting deadly stoges, according to a Sept. 22 American Journal of Public Health article.
About 70% of Americans who smoke are interested in quitting, according to the U.S. Department of Health and Human Services webpage.
Affordable vapor products make it easier for smokers to stop reaching for their daily cigarette pack. However, many people won’t have any other alternatives to cigarettes because Biden’s tax plan equally affects vapor products.
A vapor excise tax of $1.65 per milliliter of liquid would drive 2.5 million Americans back to smoking, according to a July 24, 2020 study by Michael Pesko, a health economist and associate economics professor at Georgia State University.
A tax on vapor products will lead youth to increase their use of tobacco, according to a September National Bureau of Economic Research study.
Vapor products would be taxed at a rate equal to cigarettes and the average cigarette smoker currently pays $1.01 in federal excise tax, according to an Aug. 31 Tax Foundation article.
The multi-trillion dollar tax plan will also target small businesses, especially those that are still grappling to recover from the coronavirus pandemic.
Convenience stores are the top sellers of cigarettes nationwide and generate more than $575,000 total in revenue on average, according to an American Lung Association study.
This will have a huge economic influence and go against any revenue the U.S. government raises from the tax increase.
Such increases in federal excise tax will reduce sales, lead to employee layoffs and cause lost wage income, according to the National Association of Tobacco Outlets’ (NATO) Federal Excise Tax Increase Study webpage.
Any hike to the federal cigarettes, tobacco and vapor taxes will have a significant negative effect on retail stores, distributors, employees, states, cities and local communities, according to the same NATO webpage.
Users may rethink their decisions to purchase the products but that doesn’t mean this will stop them from buying it at all.
A factor that must be considered: the inescapable scope of addiction.
Simply making tobacco more expensive won’t stop people from wanting to smoke. Nicotine is addictive and this will only change their buying habits.
