PolicyGuy

Tuesday, June 29, 2004


Michigan Tries to Smoke Out New Revenue.
Faced with a(nother) budget shortfall, Michigan's politicians went back to the well and raised the "sin" tax.

In this case, it meant raising cigarette taxes to the second highest level in the nation. Not only does this present many possibilities for trouble--smuggling and job loss, to say the least--but it represents a lost opportunity to use a difficult situation to improve the long-term budget situation.

Say again? If officials had responded not by raising taxes but by making the state shed some unnecessary burdens, the long-term fiscal health of state would have improved. Fewer responsibilities in the future, less money required, and fewer budget crises.

As a result of this latest tax increase, the state continues to work at cross-purposes with itself. One rationale for the increased tax rate is to improve public health by decreasing the habit of smoking. But another rationale is simply to raise funds. Oddly enough, one way that the money is spent is on ... public health programs. A $2 a pack tax is at once a denunciation of smoking, and an acknowledgement that government is addicted to tobacco (taxes).

"Justice Louis D. Brandeis'?s metaphor of the states as "laboratories" for policy experiments ... had almost nothing to do with federalism and everything to do with his commitment to scientific socialism. .... To this day, it continues to inhibit a truly experimental, federalist politics." -- Michael S. Greve

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