Title: CBPP says Regressive Cigarette Taxes are Okay Because: The Benefit Principle | Tax Foundation
Headings: CBPP says Regressive Cigarette Taxes are Okay Because: The Benefit Principle
CBPP says Regressive Cigarette Taxes are Okay Because: The Benefit Principle
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Content: 29 percent of poor adults smoke, compared to 18 percent of non-poor adults” and “expenditure for cigarettes account for a greater share of lower-income households’ budgets.” Generally, CBPP is opposed to regressive taxes and favors the more progressive income tax. But this time, the regressivity of the cigarette tax doesn’t bother CBPP. They say that a cigarette tax isn’t really that regressive because the population that pays the tax benefits the most from the tax through health benefits and increased funding for early childhood education. They are getting what they pay for. In essence, the CBPP is endorsing the benefit principle: a principle that states that taxes people pay should reflect the benefits and the costs of services they receive. I assume this means the CBPP will be more sympathetic to these statements now: Raising sales taxes while lowering income taxes in states in order to move to a more consumption-based tax system is okay. Even though low-income households could pay more in taxes as a percent of income than they currently do, they are benefitting from both the public services these taxes are paying for and the resulting economic growth from a more neutral tax system.