The Coming Food Tax

Excise taxes violate the most basic principle of taxation–low rate, broad base–since they are purposefully levied on a narrow base and generally with the highest rate possible.  Why?  Generally to “discourage” the activity being taxed.

Take cigarettes for example.  The base is defined as one product and the tax rate, especially over the last decade or so, keeps going up, up and up i the name of “reducing smoking.”  Unfortunately, violating the principles of taxation carry a heavy price.  In the case of cigarettes it can lead to cigarette smuggling and cross-border shopping.

Now, apparently, they want to tax your food . . . I wonder what kind of unintended consequences will come of this?

Hat Tip to International Liberty

  • Dan Gordon

    Interesting observation, Scott. I suppose the Laffer Curve may be utilized by the Rockerfeller population reduction elitists in gauging desired results. That combined with an expansion of entitlement benefits, should get us into a more manageable posture of helplessness.

  • Scott

    Dan, yes the anti-cigarette folks often use the reduction in cigarette taxes as proof that they are discouraging smoking. In reality, much of the drop is due to purchasing cigarettes in other locations, the black market or on the internet.

    Interestingly, in Maine cigarette tax collections increased last year–contrary to the claims of the high cigarette tax folks. The reason was simple, NH increased their cigarette tax to near parity with Maine therefore significantly reducing the incentive to buy cigarettes in NH. Mainers are staying home to buy their cigarettes hence the increase in Maine cigarette taxes. The disincentive to stop smoking, therefore, appears to be very small.