10% of households pay more than 80% of taxes on alcohol and cigarettes | Hacker News Reader

10% of households pay more than 80% of taxes on alcohol and cigarettes

www2.nber.org

93 pointselsewhen260 comments

>Efforts to increase sin taxes should consider the heavy burdens borne by few households.

I think they should consider how much nicer things are now that so many fewer people smoke. I can still remember people smoking on planes, in restaurants, etc. It was terrible. I'm in favor of anything that keeps that from happening again.

It wasn’t sin taxes that stopped those things.

There is still less smoking regardless, though. Where I live if I see someone smoking in public more often than not they are a student from a country where cigarettes are much much cheaper. A packet of cigarettes is 4.5x cheaper in Poland than the UK for example.

I'm a very big fan of the São Paulo approach, just ban indoor smoking everywhere, period. The only places you are allowed to smoke are inside a dwelling or out in the street (with the caveat that there must be a clear view to the sky). Cigarettes are still cheap, but unwanted smog doesn't bother me anymore.

Isn't this how it already works in the US?

Also exactly how it works in UK - no smoking anywhere indoors.

No, many bars still allow smoking.

>No, many bars still allow smoking.

Where, exactly, is that the case?

I've traveled all over the US and haven't been in a bar that allowed smoking indoors in at least 15 years. And as a smoker, I would definitely notice.

Edit: As kube-system pointed out[0], there are a bunch of places that don't have indoor smoking bans. Although the Wikipedia[1] link they provided does say that ~80% of American live in a place with some restriction on smoking indoors. I stand corrected. Thanks kube-system!

[0] https://news.ycombinator.com/item?id=29003693

[1] https://en.wikipedia.org/wiki/List_of_smoking_bans_in_the_Un...

Mostly pool hall sort of places I'd imagine.

All of the south except for NC has no state bans on smoking in bars, although many major municipalities ban it.

https://en.wikipedia.org/wiki/List_of_smoking_bans_in_the_Un...

Specifically I've been to bars in Tennessee and Florida in the last 8 years that allow smoking inside, as well as a diner in Kentucky that still had a smoking section until a few years ago.

Really? I did not know anywhere allowed indoor smoking. There are even states that have banned smoking in hotel rooms.

We'll call this the "California in 1998" approach.

It is to a great degree. Many acquaintances have stopped smoking because it got too expensive. That many people stopped smoking is what enabled us to ban it in so many places afterwards.

The bans are a huge inconvenience to smokers. That's the point, but it would have been political suicide a few decades prior.

though if that's correct, in that case, wouldn't the 'sin' tax have been political suicide if that was brought in first when there was even more smokers?

You can make a tax far more gradual than a ban. Slow boiling frogs and what not. And that is exactly what happened with cigarettes, at least here in Europe.

If you’re just basing this on experience / memory idk if this is true. My memory says public opinion was swayed by advertising and health risks not cigarette prices. Without some hard data on this i think either story is just as likely true

> My memory says public opinion was swayed by advertising and health risks not cigarette prices.

I'm confident smokers' opinions didn't reach quitting-stage due to ads.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2775761/

> Results: On average, smokers were exposed to more than 200 antismoking ads during the 2-year period, as estimated by televised gross ratings points (GRPs). The odds of having quit at follow-up increased by 11% with each 10 additional potential ad exposures (per 1000 points, odds ratio [OR] = 1.11; 95% confidence interval [CI] = 1.00, 1.23; P < .05). Greater exposure to ads that contained highly emotional elements or personal stories drove this effect (OR = 1.14; 95% CI 1.02, 1.29; P < .05)

Was this study done in regions without cigarette taxes?

Asking because about everyone ex-smoker I know (a LOT) quit after struggling to afford the things.

Honestly, I can't come up with anyone who could be so powerfully swayed by ads that they could quit an addiction.

I don't know, you'd have to read the study. Point was they found a strong correlation between ads and quitting. Obviously the ads were communicating health information, so it's weird to say that the ads were the reason since it was likely the health information in the ads. It's also quite possible your friends feel more comfortable citing the cost over the health impact, since they would have known about the health impact when they started. "It got too expensive" is an easier out than "I used to not care about my health, but I do now"

They both had effects. I personally know people who quit smoking when it got expensive (for different levels of expensive). I also personally know people who quit smoking when they were convinced that it was unhealthy.

Though all of the above quit before 1990 (US). Anyone who still smokes today, knows it is bad and costs money: they don't care.

Now that I think about it most who quit because it was expensive were probably influenced by the unhealthy part, but it was the cost that finally tipped them over.

That's a claim unsupported by research[1].

> Results

>From 2001 through 2015, increases in state-level excise taxes were associated with declines in prevalence of cigarette smoking. The effect was strongest in young adults (age 18–24) and weakest in low-income individuals (<$25,000).

So yes, taxes actually do at least affect smoking rates in the most vulnerable population. If you don't start smoking in your teens, you're much less likely to become a lifelong smoker.

[1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6147505/

Your source has no relation to the claim that you are trying to refute. That claim being: "It wasn’t sin taxes that stopped people smoking on planes, in restaurants, etc. "

It has some relation. If people aren't smoking, then they aren't smoking in planes or restaurants.

No, it has none. They aren't smoking in planes and restaurants because it is illegal to do so.

Increasing the price definitely prevents new people from picking up the degusting habit.

I just checked and a pack of my old smokes are over £12 a pack ($16 in Monopoly money)!

The only problem i see if that it hasn't already broke £20 a pack.

A weekend to Spain starts to pay for itself.

There's a graphic floating around that show cigarette consumption in the U.S. It goes up and up until about 1950 or so then it starts to go down and down.

I always wonder about that. I mean, I understand that there were laws and taxes and reports about smoking. Looking at that chart though it doesn't look like that. It looks like everyone went - "You know, I don't want to smoke anymore and I don't want to be around smokers" - and then just slowly gave it up over 30 or 40 years.

Was it the laws, taxes and reports? Or were all of those things just an expression of desire?

Reports on lung cancer became all the rage in the 50's:

https://books.google.com/ngrams/graph?content=%22lung+cancer...

Banning smoking in public is different from taxing smoking at home.

Agreed. I also like to think that these aren't necessarily "sin" taxes, but taxes paid up-front for the increased costs to society for the medical/public safety implications that occur from them.

Yep, they're more like prepaid usage fees.

I'm not entirely convinced alcohol or cigarette abuse cost the public much money.

Healthy or unhealthy, everyone dies. Liver cirrhosis or lung cancer is expensive. But getting Alzheimer's in your 70's and living another 10 years is extraordinarily expensive.

From the article:

> We also find that heavy purchasers of one sin good (those in the top decile) are likely to purchase larger amounts of other goods subject to corrective taxation. This phenomenon is particularly strong among households with smokers, who tend to also consume larger amounts of [sugar-sweetened beverages] as well as beer and spirits

There is a fundamental fairness question in play here.

I'm okay with the "individual responsibility but don't except affordable healthcare coverage even from medicare/medicaid" approach. I'm also okay with the "coercive policy to force people to change themselves" approach. And I'm okay with a combination of cost/coercion sharing.

What I'm not okay with is all of society bearing the cost of the 10% of the population that smokes heavily, drinks heavily, and consumers larger amounts of sugary beverages.

I guess you're also not OK with all of society bearing the cost of the 10% or whatever that doesn't work hard enough to get a job and stay off social welfare?

Disadvantaged people aren't some romantic struggling hard workers, they have all sorts of vices and emotional/mental health problems leading them voluntarily to those behaviors. Smokers aren't just selfish pleasure-seeking lazys.

Smoking actually decreases an individual's use of public resources - because they die so much earlier, smokers use less medical resources than non-smokers over their lifetimes, and they heavily cross-subsidize Social Security payments to non-smokers. From a purely fiscal perspective we should be subsidizing cigarettes, probably to the point of giving them away for free. (Hopefully it goes without saying that there are some really good non-fiscal reasons not to do that.)

The data on drinking is much fuzzier (because so many people drink in moderation) but my impression is that, as you suggest, it's significantly under-taxed relative to its negative externalities.

Edited to add: For comparison, IIRC a Pigouvian tax on sugary drinks should be something like $3 per 12 oz can. People who drink lots of sugary beverages also tend to die sooner, but they use a ton of medical resources while they're around - the average lifetime treatment cost of Type 2 diabetes is over $100k, and that's just one condition.

> because they die so much earlier, smokers use less medical resources than non-smokers over their lifetimes

Although technically true, if you apply a reasonable discount rate the analysis flips back in favor of smoking cessation [1].

If you ignore the fact that old people aren't just sent out the pasture to die, then sure, maybe you can set gamma to an unreasonable small value, you can decide that more early death is cost-effective.

But such an analysis, which again nets out positive for smoking cessation when applying an appropriate discount factor, ignores the fact that healthy older folks still contribute to society.

The retired population is an enormous social asset. They contribute disproportionately to community volunteer work, play an important role in family formation/childcare, and many also work well past retirement age. The average retired person is still performing an significant amount of socially valuable labor, regardless of whether they're filing a W-2. In many communities/families, Social Security and Medicare are at least in part a significant state-subsidized childcare allowance.

[1] https://www.nejm.org/doi/full/10.1056/nejm199710093371506

There are a couple problems with that study.

You need to apply a discount rate of 10% (which seems unreasonable for the government which can borrow at incredibly low rates.)

Also this analysis ignores that healthcare costs are accelerating faster than inflation, so treatment for an individual in 20 years will likely be far more expensive than treatment today.

It also doesn't include social security.

I think you're right that drinkers probably use less social security and medicare. But probably the damage of drinking and driving overwhelms these.

I always thought a solution would be to tax beers 1 dollar, and then give it back to the patron in untransferrable rideshare credits.

They die younger but then on the other end of the scale that's one fewer member of society who may have been working. Now their job needs to be filled.

There is some evidence that smoking actually reduces total healthcare expenditure, as smokers die more quickly than non-smokers (who tend to linger in hospitals and cost a lot of money at the end of their lives). If true, does this mean smoking should be subsidized?

Surely smokers die sooner, not quicker. Lung cancer and associated issues vs dying of natural causes are for sure a bigger healthcare burden.

It is pretty well studied and lung cancer is one of the cheapest and quickest ways to die. A lot of smokers also drop dead from heart attacks.

Smokers do have higher healthcare costs when young, and miss more workdays, but in the US where government is paying social security and Medicare, smokers dip into the public coffers much less than their non-smoking peers.

Wow, what? Could you link to some of these studies that you imply support lung cancer being "one of the cheapest and quickest ways to die"? That's so outlandishly beyond the pale of reason as well as my second-hand experience of the disease that it beggars belief and I honestly can't tell if you're joking or something.

This page helpfully presents enormous per-patient costs of lung and other cancers, estimating ~USD$100k for care in the final year of life alone: https://progressreport.cancer.gov/after/economic_burden

Lung cancer symptoms often appear in late stages, which might explain the "quick" part of your comment, but come on. We aren't exactly talking death by gunshot or asphyxiation here. Symptoms of lung cancer include chest pain, a persistent cough, coughing up blood, and metastatic bone pain or headache, none of which seem quick or pleasant: https://www.mayoclinic.org/diseases-conditions/lung-cancer/s...

i think this logic makes no sense and is backwards

obesity has the largest impact on healthcare cost by a large margin. might as well tax the obese now because we will pay them back later by keeping them alive

how about: we don’t need to tax lifestyle choices on anyone. because if you’re serious about increased costs to society you very quickly get to a social credit system. where you can show you don’t drink or smoke, aren’t fat, don’t take part in dangerous activities…

"Sin Taxes" is such a loaded term. It's an incentive to change behavior - these work and we use them all over the place.

I can't see the article, I just get a 404.

So we only incentivize and control the behavior of poor people? A $60 parking ticket is earth shattering for someone at or near the poverty line. That same ticket is essentially meaningless for someone making $150k/year.

If your incentive isn’t pegged to income or wealth, it’s just creating two tiers of society

In the parking ticket case I think it's interesting and not clear-cut b/c on one hand you have the "treat all equal before the law" and on the other hand you have desired outcomes.

It's hard for me ethically not to fall on the side of treating everyone equally under the law versus trying for specific outcomes. If you wanted to go for outcomes can you help me distinguish why you wouldn't sentence a poor person to lesser jail time or insurance payout (car wreck) or w/e lesser amount than a rich person? Does a wealthy person have more to lose by murdering someone? Less? I just don't think it's clear cut but for my part I'm definitely open minded on it. It's kind of the equality of opportunity versus equality of outcomes thing - I'm definitely on the equality of opportunity camp with probably a base versus equality of outcome.

"treat all equal before the law" could easily mean a fine that has an equal impact. Is it really equal treatment to fine someone in a way that jeopardizes their ability to pay rent and fine someone else in a way that annoys them slightly?

Idk. Is it? I don’t think there is a clear cut answer. Should the poor serve shorter jail terms since they make less money and therefore have less time post-jail to accumulate lost earnings?

The solution to that is to make them pay in person after waiting in line for an hour. An hours time to the guy making $150K is worth much more than any flat fine.

If you make a poor person drive down to the DMV and wait in line to pay a fine they will likely loose a day of work (which they cannot afford to lose) or perhaps even their job entirely (can't make your shift? Sorry, don't come back to work). A richer person will lose some money, but on the other end they will still be essentially where they were when they started.

Not to mention the side-industry of "DMV line placeholders" that would immediately pop up.

It's everyone not just poor people, I suspect it's mostly poor people that pay the tax now because the behavior incentive mostly worked. There's a selection bias here in part, people more responsive to not wasting money are going to be more responsive to higher costs - they're also less likely to be poor as a result of this.

Parking is different enough to not to be comparable. You don't die a horrible death from parking.

> If your incentive isn’t pegged to income or wealth, it’s just creating two tiers of society

I don't agree with this, but it's a longer discussion and mostly off topic. You create more issues by doing this than you fix imo. "Poor" is not a permanent state.

Arguably if what you're suggesting was the case we'd see rich people smoking because the tax doesn't impact them and poor people abstaining due to cost. We don't see that so it suggests something else is going on.

> You don't die a horrible death from parking.

You do die a horrible death from eviction because you had to choose between getting a warrant issued due to unpaid parking tickets, or paying rent. Money is a zero-sum game.

> "Poor" is not a permanent state.

Statistically it basically is, but as you say that's another topic. Either way it doesn't matter, because if I am poor now and you slap me with a parking fine that's 0.4% of my income, I'm going to suffer. While that SAME fine isn't going to have an impact on the quality of life of someone making just 2x what I'm making.

> we'd see rich people smoking because the tax doesn't impact them

Yes. This is why I don't believe that the tax had anything to do with reducing smoking rates. I think people stopped smoking because they realized they were going to die from cancer, not because it got expensive.

Meanwhile, 10% of households are DEEPLY effected by this, some of them to the point of maybe staying in poverty due to smoking.

You DO see very rich people ignoring fines because it doesn't cost them an appreciable amount:

https://www.insidehook.com/daily_brief/news-opinion/jeff-bez...

https://abcnews.go.com/Technology/steve-jobs-car-apple-ceo-l...

> "You do die a horrible death from eviction because you had to choose between getting a warrant issued due to unpaid parking tickets, or paying rent."

What I meant was fines for parking seem less socially important than fines for smoking.

I think policy that protects the lower bound from getting crippled by cascading fines is probably good - at least it's where I think the focus should be. I think we agree more than disagree on that probably.

It's expanding the cost to be more extreme at all levels that I think is a bad idea.

In your two examples the Steve one doesn't really apply. CA didn't used to require plates on new cars (they do now) and he had cancer.

The Bezos example sounds real, but also not personal? More of an "I'll cover your parking tickets" so the contractors don't get hit with them (which seems if anything like he's helping avoid those that would get hit harder by fines). That doesn't bother me too much - I guess I view a fine as an acceptable trade to discourage behavior, but if you're willing to pay it then you can.

Is that unfair because it's worse if you're poor? Yeah, but a lot of things are worse if you're poor. I don't think being poor should be the same as not being poor, but it should be bounded. I'd argue the lower bound in American society today is too low.

In Finland, it is tied to your income. No idea if that actually helps change behavior or not.

https://www.weforum.org/agenda/2018/06/in-finland-speeding-t...

Poverty is itself supposed to be an incentive. The reason we have a market-based exchange economy is to incentivize people to a.) work b.) for more productive firms that can pay you more and c.) innovate to create even more productive firms.

That people view their station in life as fixed and their success outcomes as binary (either poverty or a $150K/year job) indicates that something has gone seriously wrong with capitalism. Which may very well be true - I think a lot of people would say that something has gone seriously wrong with capitalism. But the solution to that is to fix the root cause that divides people into castes, not make things cheaper for the lower caste.

I was actually suggesting we make things more expensive for the upper class, but same-same ;)

Let me ask you this. What if fines are what dividing people into castes? The fees around court and jail in the US are a great example of this. If you get sent to jail or taken to court for any kind of infraction, the fees around it can cripple you financially for YEARS. Tho if you have a spare 50k laying around you can make them all go away. I think there are many cases outside of the criminal legal system where this is also real.

It seems backwards to me to take the bad situation that exists and make it worse to cripple more people?

I generally agree that at the lower bound there the cascading effect of penalties can be disproportionate and extreme, things like ending cash bail can be a way to improve this (though I'm not a policy expert). Making it similarly extreme for everyone seems bad? It also creates a disincentive for making money which seems like the opposite of what you want.

Our choices are:

1) keep the current system (fixed fines) 2) proportional fines (higher fines for wealthier violators) 3) abandon penalty fines entirely for another system

For most cases I'd like to see #3, since I think fines are basically a bad system of social control. However, there are going to be cases where we want to keep fines there - and for those cases #1 continues to enforce class structures, while #2 applies pressure evenly across class.

Also, sorry, I don't accept that last point. Nobody is going to stop making money because their parking tickets go up in cost. That's not how people work.

I think there are more options available.

I'd be partial to keep fines, but protect the lower bound from cascading failure.

> "Nobody is going to stop making money because their parking tickets go up in cost. That's not how people work."

There is evidence already of incentives changing behavior with the recent stimulus. I think it is how people work.

There is popular consensus that stimulus has change behavior. There’s very little evidence that is actually the case.

So I'll start with how it's supposed to work and then acknowledge that it's oftentimes not how it does work in practice.

Ideally, you're supposed to avoid high court fees & fines by not doing criminal things. Avoid the court system and you will never have to pay court fees. And if you do end up with a $50K judgment, you're supposed to go work productively and convince someone to pay you $50K for work that's worth more to them than $50K. Thus you have paid your debt to society - you did something bad, but if you do other good things that people find valuable, that debt is wiped out. In theory at least, someone with $50K in his pocket got it by doing things that a lot of people found valuable, enough that they were willing to pay $50K for it.

Now, I know it doesn't always work that way. Someone could find themselves in the court system not because they did something bad, but because they're black and were standing on the wrong street corner. We shouldn't do that. And sometimes whole behaviors that are normal in one disadvantaged culture (smoking weed, for example) get criminalized precisely because the person in power wants to jail lots of people. The person who did that should've been put in jail himself, but Gerald Ford pardoned him. This is also contingent upon people having money because they did things of value that other people found worthwhile enough to pay them for, which also isn't a given today. We should fix that too, although I think that a lot of people's reaction against wealth is because they can't wrap their heads around how many people a billion users is or how much value they derive from everyday activities provided by a large corporation.

But assuming that things are broken but we're going to slap a band-aid on the one specific instance that's in front of us today risks entrenching the brokenness. Say that you do create lower fees and fines for poorer people. Aren't you now incentivizing criminal behavior, as the costs for it are less? And won't those societal costs be born primarily by the people around them, who are usually other poor people that now have to live with the consequences?

Punishment via fines should be entirely replaced with something more generally equitable: time. $60 parking ticket should be replaced with 1 hour of community service, which (mostly) equally "inconveniences" a blue collar worker and CEO alike. Same scheme should apply to corporate crimes as well... when everybody's least favorite mega-bank gets caught defrauding customers, don't fine them, sentence the company to 1000 hours of community service, meaning every employee on the payroll has to do 1000 hours of community service and the company has to pay them their standard wages while doing it. That kind of loss would definitely change some board room attitudes.

In theory? Sure.

The reality is, the money collected really isn't spent helping folks change their habits. It goes to some unionized civil servant's pension fund...

Just look at the new "Sin Tax", carbon taxes...

People stopped smoking on planes and bars because of outright bans, not sin taxes.

What someone does in their own house should be up to them, and we shouldn’t attempt to use taxes to eliminate vice (but requiring taxes to cover the negative externalities from vice is fine, e.g. funding DUI checkpoints).

It is a combination of both. Majority support was needed as a prerequisite to enact bans.

How about increased taxpayer funded healthcare costs?

Note that, politically, there is no problem collecting higher premiums for tobacco use. But apparently alcohol was not politically unpopular enough to be a factor allowed when pricing an individual’s insurance premiums. Or vaccination status.

Subtract it from the lower social security costs

To be consistent, I would then also want to get into opting out of end of life healthcare which is where a huge, if not majority, of healthcare spend is.

Social security is not paid by other taxes. It's its own fund.

I do not find that clerical accounts for government expenses matter for practical purposes. Nominally, they can have various funding sources, but a politically popular expense will get its funding from somewhere, somehow.

It seems prudent to just treat all monies paid to the federal government as taxes, and all services/products received from the federal government as a whole when accounting for it as an individual taxpayer.

keeping very sick people alive if way more expensive than keeping older people alive.

Edit: deleted. Misunderstood authors point.

> people who take a car when they could take a bus, anyone who makes an unnecessary journey to do something that they benefit from such as church,

Some states sort of do this by requiring purchase of personal injury protection (PIP) from the auto insurer.

I don't think this is quite the argument you make it out to be, as we already have higher insurance premiums for smokers. Likewise, high-risk people are ineligible for organ transplants.

Really, anything can be a slippery slope if we want to look at it through that lens, but it's often not appropriate. This is one of those cases.

>How about increased taxpayer funded healthcare costs?

A known cost of socialized medicine.

Unless you want to go down the road of justifying any government coercion or loss of freedom as a taxpayer cost saving measure.

My point was that

> but requiring taxes to cover the negative externalities from vice is fine, e.g. funding DUI checkpoints).

Is not as simple as it may sound.

Except tobacco use does not increase healthcare costs and in fact reduces them, due to people dying earlier and more quickly.

Perhaps for the age 65+ risk pool under Medicare (mostly taxpayer funded healthcare), but probably not for the under age 65 risk pools. Or at least I am not aware of tobacco causing significant mortality before age 65.

Overall. This is not hard to verify with some googling -- I posted some links in another comment:

https://news.ycombinator.com/item?id=29005498

"we shouldn’t attempt to use taxes to eliminate vice"

Why not? Taxes are usually preferable to outright bans (which, realistically, is how governments eliminate vice), because they let you decide how much is your vice worth to you and still engage in it, with a revenue benefit to the rest of society, if you really want to.

Based on the comment, I'm sure OP is also against banning vice. So I'm not sure that reasoning will convince them.

What happens when the government decides to tax a particular vice that seems egregious, like maybe taxing vibrators as sexual deviancy?

How much is your vibrator worth to you?

This is not a good argument against vice taxes because there is a clear distinction between activities that are demonstrably self-harming (smoking) and otherwise (using a vibrator). If you want to presuppose a fundamentalist regime, then go ahead, but then are vice taxes really the problem?

I was under the impression the purpose of vice taxes is due to activities causing societal harm, not self harm.

If it was self harm, then seems like we should start with vice taxes for added sugar and not doing cardio workouts.

Sufficient self harm at scale is societal harm.

> vice taxes for added sugar

At face value, this doesn't seem like a bad idea. I've heard about cities in the US that have a tax on large sugary drinks.

> not doing cardio workouts

It's probably easier to incentivize the good behavior here than punish the absence of it.

The government giving money for doing something versus taking money for not doing something is the same thing. Both are incentives for a certain behavior.

Clearly "what's bad for you" is subjective given that there was a time when many would have said that masturbation causes self-harm.

The other issue is that sin taxes just don't work. They don't stop people from partaking at all. These taxes are just a money grab.

Okay. Use of Facebook has been linked to worse mental states, and groups on there have produced negative externalites. So how about a per-byte tax on in transmissions to/from Facebook?

From the self harm angle: if you can provide meaningful evidence that use of [social media] results in negatives that far outweigh the positives in virtually every case (this is true of smoking), then this tax makes sense. This isn't easy, though, as millions of people have benefited massively from social media.

As for societal harm, I imagine going forward we'll settle on some countermeasure against entities like Facebook. If that's a per-byte transmission tax, then so be it.

Perhaps a tax that scales with the frequency that someone uses social media? If you rarely use it, the marginal tax is near zero. As your usage increases, the marginal tax applies increasing friction.

Nice slippery slope there. Let's argue about it when the time comes.

So I'm thinking precisely of situations like that when I say taxes are better than bans. I have pretty tame vices (I don't really care about vibrators or cigarettes, for example).

But take for example suburban single-family homes. We know they are significantly worse for the environment than urban apartment living - they are harder to heat & cool, require more invasive utility work, lead to car-driven transportation instead of mass transit, and destroy natural habitats. Nevertheless, I want to live in a house, not an apartment. And if the government were to tax them according to their true environmental impact and costs, I'd suck it up and pay the tax, getting a more unpleasant but higher-paying job if necessary. (They don't currently, and I'm enjoying the sweet subsidy of our unsustainable lifestyle.)

There are other things like say soda that are unhealthy, and a tax has been proposed on them. I cut back my soda consumption because it got expensive, but sometimes I really want to relax with an IBC or Jarrito or Mexican Coke, so I'll suck it up and buy a 12-pack. That's exactly the point of a tax: cut back people's default consumption because it gets expensive, while still giving them the option of purchasing if they really want it.

You make good points about single family homes. I just want to add that maintaining the roads is also unsustainable financially. Most suburban roads are subsidized by the cities they surround.

I believe several states currently try to ban the sale of sex toys so the tax would be an improvement.

Sex toys are borderline medical devices and probably should go thru some sort of regulation, certification and safety testing already, hence tax would make sense...

Why not? Taxes are usually preferable to outright bans (which, realistically, is how governments eliminate vice)

Governments that attempt to eliminate vice by banning inevitably simply drive it underground where it is then facilitated by dangerous black markets and criminal organizations.

And so long as the tax is less than (typically very expensive!) black-market overhead, that's not a problem.

IMO, it seems like a poor plan to rely on the revenue from excise taxes on particular luxuries (harmful or not). It's not a stable source of revenue, because increasing the tax will decrease use somewhat, and also acts as an indirect subsidy for alternative behaviors and grey markets (that you would also probably like to oppose if you are against the original one).

The only scenario that makes sense is to fund programs to help people deal with the negative effects of consumption (as, theoretically, such programs would not need to exist once consumption stops). However, unless you don't believe in addiction at all, it's clearly immoral to tie funding of treatment programs entirely to excise taxes.

So you have to weigh a revenue offset against the morality of, again, taxing people who may have compromised agency to one degree or another. I think our system does less ethical things all the time, but it's hard for me to feel these kinds of taxes are "well founded."

If we had real universal healthcare (or better cost sharing) then I think a much broader tax on things that have predictable health impacts might be sensible, but for it to work it would need to go far beyond "morally questionable" things and into, say, taxing companies that employ people to do labor that will reliably damage their bodies.

> It's not a stable source of revenue

That's fine. Revenue can be routed to externality abatement. When there's no more revenue, there's also less need for the abatement.

The issue is that vice taxes tend to be highly regressive.

Spirit duty in the UK is £28.74 per litre of pure alcohol. A ~£20 bottle of Jack Daniels pays a tiny bit over £8 of spirit duty, which is 40% of the sale price. A £250 bottle of 25 year old single cask Glenlivet pays a tiny bit under £8 of spirit duty, around 3% of the sale price.

I don't think it's entirely reasonable that the vice tax is a rounding error for fancy drinks, but amount to almost half the price you pay for cheaper booze.

Maybe the answer to flawed vice taxes is to address those flaws rather than to advocate for an outright ban.

Seems obvious that it should be percentage with minimum amount. Would treat both sides fairly.

There are probably 100x more buyers of cheap alco than something that you mentioned

> The issue is that vice taxes tend to be highly regressive.

For a cross-sectional view this is certainly true. At a single point in time, a high tax rate impacts people who are more economically vulnerable more than those that are wealthier. However, does the causality hold if we consider this over time?

Addictive substances use -> economically impoverished, or economically impoverished -> addictive substances use?

To me it seems many folks use addictive substances to self medicate in absence (or in spite of) a universal healthcare system. And then when economically improving opportunities come may have less capacity to claim them.

Do we look at it this way? Does it matter? General open questions.

This is the problem I have with the sugar tax. It is typically per ounce. Normally the more sugar something has, the more expensive it is. The more expensive it is, the less the sugar tax effects the price. A bottle of coke goes up like 25 cents, but a gallon of ice tea had is outside doubled.

No, because as you get more wealthy the disincentive from sin tax negated by the fact that it isn't a sliding scale.

In reality is it gatekeeping on vices by the wealthy. If you are wealthy, nobody cares about your vices.

Because eliminating vice is not a proper role for government? Because choosing among the vices to tax is..I don't know, bad? I prefer legislators having to balance asking for new initiatives with having to pay for them with universal taxes. But hey, let's just take from smokers and billionaires rather than actually have to make the case for our next government boondoogle.

Because we as a society shouldn't be in the business of telling people how they should live their lives, except to protect other people.

"What someone does in their own house should be up to them"

I agree with this. The problem is that smokers smoke in public spaces. This causes direct problems to me and everyone else who does not smoke. It infringes on my freedom.

Also for whatever reason, cigarette smokers get a pass on littering. It's disgusting. Tax dollars should be raised on cigarettes so we can hire people to clean up after smokers.

For the most part, the places you can legally smoke outdoors should prevent any meaningful amount of second hand and sidestream smoke. Sure, you may smell it, but I honestly don't care if people have to smell scents they don't like occasionally. The littering thing is an odd exemption, but the mass transition from cigarettes to vapes seems to have reduced that problem, significantly.

In Texas there are 3 million smokers. The avg smoker smoke 14 cigs per day, which is 255 packs per year. A pack of cigarettes is currently taxed at about $5 in Texas. That 3mil255packs$5 = 3.8 billion in tax revenue.

I doubt we're spending anywhere near that much money on cleaning up cigarettes.

Note* these numbers are wrong.

The actual taxes on a pack of cigarettes in Texas are 2.42. i grabbed the $5 from a proposal.

Your numbers are way off. The average cost is ~ $5.75 of which $1.41 is tax. That's revenues of about a billion per year. Pretty sure we can find a billion dollars in externalities related to smoking.

We're both wrong it's 2.42. you didn't include the federal tax, the $5 was wrong.

We might spend that much if we actually cleaned most of them up.

So maybe we could consider the tax isn't really about cleaning them up, but compensating the rest of us for having to look at them.

There is no societal cost to high rates of alcoholism/smoking/obesity?

I'd argue that we already all pay for one another's bad habits in a very roundabout way.

https://journals.plos.org/plosmedicine/article?id=10.1371/jo...

>Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained. Obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.

Cost increases to whom? Society or the individual? If a person is living longer and healthier then isn't their income and economic contribution higher as well? This does not even mention retirement. This seems like an extremely narrow stat to draw conclusions from.

>Cost increases to whom?

I provided a link to the article so that interested people could read it. It's all laid out quite nicely: health care costs.

> What someone does in their own house should be up to them, and we shouldn’t attempt to use taxes to eliminate vice (but requiring taxes to cover the negative externalities from vice is fine, e.g. funding DUI checkpoints).

Heartily disagree. Pigovian taxes are fantastically persuasive.

that’s not a disagreement. pigouvian taxes aren’t used to ban, but to internalize costs, which has a secondary dissuasion effect. it’s a economic solution to a market inefficiency (i.e., a mispricing), not a legal solution to a social vice.

> a [economic] solution to a social vice

Pigovian taxes are an economic solution, as are sin taxes. To the pocketbook there is no difference.

no, that’s the whole point. these have very different purposes. pigouvian taxes are meant to internalize externalities. sin taxes are punitive and regressive, which is decidedly uneconomic. you may still support sin taxes, but not on economic grounds.

> you may still support sin taxes, but not on economic grounds.

I do not recognize a distinction. I see that you are citing common critiques of the sin tax relative to the Pigovian tax, but they are substantively and consequentially the same. As a consumer I pay $Price + $Tax for the good, be it due to a taboo good or internalization of cost. Perhaps your concern is on the constraint -- Pigovian taxes are intended to encourage socially optimal consumption, whereas sin taxes are to encourage disuse of the good (which, as it stands, a Pigovian tax is also encouraging for some subset of the consumers on the demand curve). Ergo sin taxes are a subset of Pigovian tax where the legislative body has deemed the optimal social consumption of the taxed good to be zero.

Now, _WHY_ the legislative body or society writ large deems said taxed good's total consumption to be zero versus some lower optimal consumption amount the free market cannot attain is a question on where preferences and metapreferences originate, which is a bridge economics is not prepped to cross.

But regardless, it fits squarely in the framework of Pigovian tax policy.

a pigouvian tax attempts to attain an economic optimum, while a sin tax disregards it, and in fact, blows right past and into economic inefficiency. by your own admission, you're making an non-economic argument (for sin taxes), and that was the point.

I highly recommend revisiting the definitions for normative versus positive economic statements.

A sin-tax is a subset of pigovian taxes where the social norm for optimal consumption is zero. This is squarely in the realm of economics, your protests aside.

As I stated in the prior comment that I believe you perhaps only skimmed, how the society came to that conclusion that the optimal consumption is zero is beyond economics. If you would like to discuss belief formation and other psychology/sociology discussions, I'm happy to engage but I'm sorry to say it's only an area of interest.

Eh. We have to tax something. It seems better to get a given dollar of tax from cigarettes than income.

I'll also point out that commercially supplied addictive substances are never only "in their own house", in that the companies engineering and encouraging addiction are going to use profits to go and hook other people. So maybe look at this as a tax on the addictors and a barrier to generating new addicts.

Also, do you have data on this?

> People stopped smoking on planes and bars because of outright bans, not sin taxes.

My dad quit smoking before bans were common, and the (rising) cost was one of his motivations.

> Also, do you have data on this?

My argument wasn’t that people quit smoking all together, but people stopped smoking in public spaces like planes and bars. Sure the occasional person lights up in the airplane bathroom despite the ban, but I think my broader point still stands.

I see what you're saying. But given that the proportion of smokers has fallen by 2/3rds in the US, I think it's not just about the bans.

Indeed, I think what made the bans possible was declines in smoking rates. And those declines were partially driven by increasing tax. Look at California for an example:

https://www.cdtfa.ca.gov/DataPortal/charts.htm?url=CigTaxSur...

Note the big jumps in cigarette tax revenue in 1967 and 1988. That 1988 jump is from Prop 99: https://en.wikipedia.org/wiki/1988_California_Proposition_99

Then look at the bottom graph here, showing how CA smoking rates declined quickly from 1988 to 1995 when the indoor ban was put into place:

https://tobaccofreeca.com/tobacco-industry/2016-california-t...

Of course, a lot was going on there, including social changes and the use of a lot of that revenue to discourage smoking. But it would seem pretty bizarre to me that the lack of smoking in public places had nothing to do with it becoming significantly more expensive over time. Especially given what a sizable portion of the retail cost of cigarettes was taxes: https://www.tobaccofreekids.org/assets/factsheets/0210.pdf

Peoples skunk weed habits rarely stick to their own house.

I only smoke weed in my own home, as do most of my (adult) friends. Are stoners blowing weed smoke into your windows?

We’re not trying to eliminate vice.

We’re trying to decrease health care expenses we’re paying and the poisoning of children who live in said homes and have no say in the air they breath.

Smokers, as they die young but not so young as to reduce the labor force, save money rather than cost money. Quite a bit of money, actually[1,2]. People will of course die anyway and treating them of whatever cancer or heart disease they get when they are older also has costs.

You can make arguments against smoking (it's not good to die prematurely of lung and heart disease) but these financial arguments aren't valid.

[1]https://www.nzherald.co.nz/nz/smokers-save-govt-cash-says-re...

[2]https://reason.com/2012/11/21/want-to-save-health-care-costs...

In the US, since the costs for risk pool for over 65 and under 65 are allocated separately, unless the tobacco smokers are dying quite a few years before age 65, then they are more costly to members of the risk pool for people under 65.

The simple proof of this is that insurers have no obligation to charge tobacco users a higher premium, but all of them do (for under age 65 insurance).

If it was true that tobacco users were less costly from age 0 to 65, then insurers would not be charging tobacco users extra since any one could steal customers by offering a lower premium.

To cover negative externalities using taxes unrelated to that negative externality makes zero sense to me.

>I think they should consider how much nicer things are now that so many fewer people smoke. I can still remember people smoking on planes, in restaurants, etc. It was terrible. I'm in favor of anything that keeps that from happening again.

I'm not sure that those outcomes are really related anymore.

Smoking indoors is verboten pretty much everywhere, and has been for quite some time. IMHO, raising or lowering taxes on cigarettes won't change that, nor will it change if more people start smoking.

What makes you think that adjusting cigarette taxes would have an impact on such laws/regulations? I'm not being snarky, I just don't see the connection here.

Anecdotally, as a cigarette smoker myself, I'm glad that smoking indoors (including on transport vehicles like planes, trains and buses) isn't allowed.

I hate smokers because they they don't police their cigarette butts and leave the things littered everywhere, including parks, playgrounds, nature reserves...

If nothing else, I'd tax them for that BS. It's the shopping cart test, at least 90% of smokers are like this, unable to do function in society unless their incentivized not to cause harm, and I disdain them for it.

Seriously. Recently I participated in a community clean up event. 99% of what we picked us was cigarette butts. It is insane how much trash and litter smokers create.

Some cigarette butt's biodegrade, most don't. I'd be in favor of a law to make them all have to be biodegradable.

Still should just throw the damn things away, but changing human behaviour is difficult.

Add pet owners to the list :(. Germany seems to have a dog tax or something like that.

>at least 90% of smokers are like this

Please provide a source of data for this assertion. Thanks!

Things that are universally witnessed have low need of citation.

In this case it seems unlikely that >10% of smokers consistently transport their butts as long as it takes to find a receptacle. Outside of Scouting or military facilities, it's so rare that it commands attention.

>In this case it seems unlikely that >10% of smokers consistently transport their butts as long as it takes to find a receptacle. Outside of Scouting or military facilities, it's so rare that it commands attention.

Your assertion is a reasonable one, especially as it doesn't claim that specific numbers of people participate in a particular behavior.

However, GP stated unequivocally that "at least 90% of smokers are like this"

That assertion can't be supported by facts/data AFAIK.

I suppose you could argue that GP was being hyperbolic, but as the old saw goes, "claims require evidence and extraordinary claims require extraordinary evidence."

Take from that what you will.

> However, GP stated unequivocally that "at least 90% of smokers are like this"

This seems like a technical gotcha that has little to do with his overall point. Not all low-hanging fruit is worth picking.

>This seems like a technical gotcha that has little to do with his overall point. Not all low-hanging fruit is worth picking.

That's as may be. But as a smoker, I took offense to their characterization of me.

Call it whatever you like, but I don't appreciate being berated -- especially when such insults aren't valid.

As I said, take from that what you will.

Great, you're in the 10%, but if you know other smokers, you know they throw their butts on the ground at least some of the time, I've seen smokers do it when a receptacle was 5 feet away. I was being hyperbolic, but having witnessed thousands of smokers in my lifetime, especially from when I was young, I'm pretty sure I have a decent sample size. All of them threw their butts on the ground, giving them 10% that didn't was being generous to people like you, which are basically unicorns as far as I'm concerned.

You're painting a whole bunch of people you don't know with a broad brush.

I hate people who do that.

Doesn't mean he's wrong.

I smoke about 1 cigarette a day and I always make it point to throw the butt away. I think they should be made with biodegradable filters at least

Toward the end of my smoking I was like this. Before I only smoked when I worked on cars - always my house or a friends'.

Also, for those of us unfortunate enough to live in apartments, tobacco smoke from neighbors gets into every open window and into ventilation shafts. I have to leave the air purifier running even when the outside air is fine because of this.

>Also, for those of us unfortunate enough to live in apartments, tobacco smoke from neighbors gets into every open window and into ventilation shafts. I have to leave the air purifier running even when the outside air is fine because of this.

Smoke-free buildings[0][1] are becoming more common. Perhaps you might consider moving to such a building?

[0] https://no-smoke.org/frequently-asked-questions-housing-prov...

[1] https://www1.nyc.gov/site/doh/health/health-topics/smoking-s...

I imagine you apply the same hate (your word) to all people who use plastics, because some of them don't use the trash bin? Frankly, I see more plastic waste in the places you mentioned than cig butts, at least in 2021. Could be a regional thing too.

Yes, I hate litterers too, but most people don't litter, almost all smokers litter (probably the plastic too), so I'm inclined to be biased against them.

It probably has little deterrent effect on those that are already using the product. If I enjoy nicotine or alcohol or are addicted to them, I'm likely willing to pay more for it.

I wonder if there are any studies about the deterrent effect for adopting smoking / drinking.

If someone is considering taking up smoking and cigarettes cost $1 / pack vs $10 / pack, I would imagine that there would be people that would see the $10 / pack and think, "too expensive a habit, better not start."

>> Smoking indoors is verboten pretty much everywhere, and has been for quite some time.

Just stayed at a hotel this past weekend. You had to sign a release saying you won't smoke in the room. There was a sign in the room saying if you did, you would be charged an additional $250.

So yeah, its been verboten for a while, but apparently this specific hotel chain had to institute paperwork and additional in-room warnings in order to stop people from smoking in their rooms.

I'm sure some of that also has to do with weed being legalized in a good portion of the states now, too. I know it was a big problem in hotels in Oregon when they did at first. Just about any hotel you walked into was very pungent. Like it used to be with cigarettes before indoor smoking bans.

Taxes aren't the reason so few people smoke. It might have been somewhat contributory, but the main reasons so few people smoke are social pressure and the fact that it is so much more inconvenient to smoke because there are so few places you can't smoke.

Travel around the country and you'll see more smoking in places where there's no lack of places you can smoke and where no one will side eye you for smoking.

Taxes are not just "somewhat contributory", there are studies that show that taxes do decrease smoking significantly.

Lots of young people have taken up vaping. Smoking is on the rise IMO.

How are these things logically connected, especially in the context of long-term health risks?

I think it's important to distinguish between sin taxes and externality taxes.

Drinking alcohol, for the most part (although not entirely), is purely a sin, and does not inherently affect the public. Smoking does, either in a minor and indirect way due to pollutants entering our shared atmosphere or a much more direct effect if someone is smoking in your local vicinity. I'm all for taxing the thing that affects people but isn't so horrible as to ban outright, but not so much the "sin."

>Drinking alcohol, for the most part (although not entirely), is purely a sin, and does not inherently affect the public. Smoking does, either in a minor and indirect way due to pollutants entering our shared atmosphere or a much more direct effect if someone is smoking in your local vicinity. I'm all for taxing the thing that affects people but isn't so horrible as to ban outright, but not so much the "sin."

Please define "sin" in this context.

According to Merriam-Webster[0], "sin" is:

   an offense against religious or moral law

Depending on who you talk to, divorce is a "sin." As is sex outside of marriage, eating pork or shellfish or cheeseburgers.

Shall we implement high taxes on those things too?

Please note that my issue is with the term "sin," as it has strong religious implications which, at least in the US, have no place in the operation of our secular government.

[0] https://www.merriam-webster.com/dictionary/sin

You're preaching to the choir.

I met one of the individuals responsible for introducing the heavy tax on cigarettes in the province of Alberta. He said it was fairly simple, The province needed more money and from the data they found that cigarette prices were inelastic. I.e. people will continue smoking even if prices went up. From an economics perspective those are the items you want to tax because taxing elastic items leads to what's known as dead weight, a type of economic inefficiency.

He also said that the province typically brought in more money from cigarettes, liquor, and gambling them from oil and gas revenues, which was pretty shocking considering what a staple that is for government revenue in that province.

The other argument in its favor he brought up was that these people are increasing the overall cost to the Healthcare system, and the sin taxes are a way I'm dealing with that.

Except it's not true. Smokers die sooner so they actually reduce the cost of the healthcare system.

are their methods of death more or less expensive?

Dying soon doesn’t reduce costs if it’s preceded by needing a decade of medical attention.

Highlights

• Cigarette smoking contributed to 11.7% (more than $225 billion) of annual healthcare spending in the U.S. in 2014.

...

Conclusions

Cigarette smoking exacts a substantial economic burden in the U.S. Continuing efforts to implement proven population-based interventions have been shown to reduce the health and economic burden of cigarette smoking nationally.

Source: https://www.sciencedirect.com/science/article/abs/pii/S00917...

Ya that isn't true as they don't die fast, and they usually don't all die: https://www.reuters.com/article/us-healthcare-costs-smoking-...

Estimate on this says 8.7% of health care spending caused by it.

deadweight loss is the term you are thinking of, and this is the same reason milton friedman called land value tax "the least bad tax."

Sin taxes produce more revenue than energy royalties, but most of the revenue from the oil and gas sector is income taxes on the companies and their employees.

Ah that's correct. Thanks for the clarification.

The article is down right now, but looking at the comments, the framing of this issue is weird. 10% pay 80% because 10% BUY 80%.

That might be hard to believe.

But I remember looking at data on liquor consumption and curious about what the 80/20 rule was on it, and I was horrified to find that the something like over 50% (correction, 90%) of all liquor is consumed by people who drink and AVERAGE of 750ml for themselves per week.

Alcohol sales primarily go to alcoholics. It's a truth we don't want to see.

EDIT: when I say "liquor" I mean vodka, whiskey, etc - stuff that is at least 80 proof/40% ABV. Not wine.

That's like one bottle of wine? I really don't think that's enough to qualify someone as an alcoholic? I drink once or twice per week and probably go through more than that.

It's one bottle of wine, but I'm assuming they're referring to liquor. There's about 17 drinks (it's like 44 ml to a shot in the US) in a bottle of liquor.

That said 17 drinks in a week is 2 a weekday plus 3 a weekend, which doesn't seem that crazy.

Until you realize that that means -every week- that's your plan. When's the last time you drank 2+ drinks a day every day for a year?

~2 drinks a day, every day, isn't great for you, but it isn't sufficient on its own to meet the criteria of alcoholism (Alcohol Use Disorder).[1]

> Healthcare professionals use criteria from the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5), to assess whether a person has AUD and to determine the severity if the disorder is present. Severity is based on the number of criteria a person meets based on their symptoms—mild (2–3 criteria), moderate (4–5 criteria), or severe (6 or more criteria).

A lot of the criteria are like, do you physically depend on alcohol? Or alcohol has harmed your quality of life?

[1]: https://www.niaaa.nih.gov/publications/brochures-and-fact-sh...

As an alcoholic, if you depend on that one drink every day and CAN'T go without it, you are an alcoholic.

Yeah -- it's the dependency that's the diagnostic criteria, not the daily drink.

Alcoholics drink a lot more than 750mL of wine a week.

Wine is only ~12-16% alcohol. I think OP is either referring to ~40% liquor or 100% ethanol (as a unified way to compare across consumption of different types of alcoholic beverages).

Oh right, brain fart.

750ml a week is less than a glass of wine each day which is supposedly the amount that's good for heart health.

https://www.mayoclinic.org/diseases-conditions/heart-disease...

The parent comment, however, was referring to liquor. Which, I assume, to be whiskey, vodka, tequila, etc.

I was shocked to realize the alcohol industry caters nearly entirely to addicts. Something like 75% of alcohol is sold to raging alcoholics.

https://www.washingtonpost.com/news/wonk/wp/2014/09/25/think...

Consumption (average number of drinks per capita consumed in the past week, by decile, among adults aged 18 and over) deciles:

   bottom 3: 0 drinks/week
   4th:  0.02 drinks/week
   5th:  0.14 drinks/week
   6th:  0.63 drinks/week
   7th:  2.17 drinks/week
   8th:  6.25 drinks/week
   9th: 15.28 drinks/week
  10th: 73.85 drinks/week

YES! This is similar to the data I was looking at. Thank you for sharing the numbers.

> Alcohol sales primarily go to alcoholics. It's a truth we don't want to see.

I've always led with that assumption and I'm fine with it. I know how we got here and I think understanding that is important.

Link doesn't work for me, looks like it was meant to be this: https://www.nber.org/papers/w29393

Me too! Thanks for posting the URL.

Surprised that this complaint isn't voted higher up (currently). One of the things that make HN discussions better than in most places is the unofficial requirement to read more than just the headline.

If we don't read stuff before we comment, we'll slowly become just like any other forum on the web. Even if that's the destiny of any web forum, I'd like to fight it for as long as possible.

I'm not in favor of sin taxes, but even if these items were taxed at the standard rate, these percentages wouldn't change. If anything, it shows that there's a great chemical dependency that should be addressed and taxation isn't an effective way to promote societal change.

> even if these items were taxed at the standard rate, these percentages wouldn't change

Back in school, we read studies that reached the opposite conclusion, suggesting that "sin" taxes are effective.

I somewhat agree. I think that all that might happen is that the headline would change to something along the lines of "10% of households pay 50% of taxes on alcohol and cigarettes". I think it's easy to look at these things, see how they disproportionately affect the poor, and try and draw a causative relation based on that. I get it, I'm guilty of it, but I think a lot of these problems are substantially deeper than that.

I think the more important question is "why are these 10% so dependent on alcohol and cigarettes? what about the way we structure society leads to this behavior?" and I think focusing on the "sin tax" part of it really misses the mark. Eliminating sin taxes would be, at most, a band-aid patch, not a "solution".

My alternative hypothesis would be that you would expect the imbalance to increase if sin taxes work, because they would suppress consumption among casual consumers, but not the addicts, among whom demand is expected to be less elastic.

Which is a societal change, though maybe not the intended one.

Here in Seattle, we have no income tax. We also don't charge any taxes on things like transit, groceries, healthcare, rent, and utilities.

It's quite possible to live as a lower-income individual in Seattle without paying almost any state or local taxes.

But if you smoke tobacco or marijuana, drink alcohol or sugary drinks, eat fast food or prepared food -- you'll pay a ton in taxes. It's a bit ironic that such a progressive town has found a way to push so many taxes on poor people in an attempt to help them.

I mean the biggest driver of this is not anything to do with Seattle specifically, but instead the State's constitutional prohibition on an income tax, which forces cities and counties to use more regressive tax methods.

A prohibition on income tax and on progressive (uneven) taxation in general. The legislature are trying to push against both prohibitions in 2022. They have levied a flat 0.85% payroll tax, which is essentially an income tax, and a progressive capital gains tax (with a wide 0% bracket and a 7% bracket above some threshold).

Yeah, it'll be interesting to see how those both hold up in the courts. The LTC tax is along these lines as well (while also being fairly regressive because literally everyone with any meaningful income is going to opt out of it).

I feel like the conclusion you are drawing from pushing to is weak here. Yes, those with chemical dependencies for smoking or drinking that also are poor would fall in this category of taxes but sugary drinks, fast food, and prepared food I would say do not fall in that category. I'm not sure how you are tying the other ones because they are primarily consumption taxes as being pushed exclusively on the poor. Even when I was less fortunate what was killing me were things like gas tax, having tolls be more expensive then electronic payments/ezpass, paying government fees and incurring service charges unless you do some crazy manual effort, or running into services that needed me to have a smartphone with data instead of the flip phone I had at the time. Yes, I ate fast food and bought prepared food but I just did it less than I am doing now and I was choosing options that matched my income so my total tax burden from those verticals were lower anyway.

> Here in Seattle, we have no income tax.

We're (Washington) adding a 0.85% payroll (more or less income) tax for most workers in 2022.

> We also don't charge any taxes on things like transit, groceries, healthcare, rent, and utilities.

Groceries: Uncooked foodstuffs are tax-exempt. But alcohol, toilet paper, and diapers are taxed.

Rent: We have property taxes and those are definitely passed through to renters by landlords.

Utilities: There are taxes on both SCL (electricity) and SPU (water and trash) services. They're just included in the prices shown on your bills.

> It's a bit ironic that such a progressive town has found a way to push so many taxes on poor people in an attempt to help them.

Washington as a whole (and to some extent Seattle) is really more libertarian than progressive. There are more progressives in Seattle than elsewhere in the state, but for some reason our image is more progressive than the reality.

In Australia at the time I grew up we got a lot of British TV. One I still remember fondly is Yes, Minister (and the follow on Yes, Prime Minister). This to me was the golden age of British TV.

Anyway, any talk of smoking taxes always reminds me of [1].

Australia is also a good example of the impact of high prices on smoking rates and the evidence strongly suggests hiking prices is the most effective way of bringing down smoking [2].

Still, profiting from death is an ethical issue. If the disastrous War on Drugs has taught us nothing it's that prohibition doesn't work so it's at worst the lesser of two evils.

It is unfortunate that this does contribute to keeping some people poor however.

[1]: https://www.youtube.com/watch?v=WJIMffhpZRw

[2]: https://www.tobaccoinaustralia.org.au/chapter-13-taxation/13...

>"It is unfortunate that this does contribute to keeping some people poor however."

Which is why instead of prohibition and instead of taxes we should educate the public

It’s interesting that we have found a way to reduce smoking through taxes but not the much larger problem of obesity.

Sugar and other lobbies

I assume this is just because you can stop smoking altogether, but can't stop eating altogether.

Here in Chicago we passed a (poorly implemented) sugary beverage tax. Nonstop political ads followed and it was repealed after less than a year.

It would be really interesting to see a sort of sin tax applied to unhealthy foods that contain excess sugar (soda, candy, etc). Not saying I'd be for or against it, but I'd be very interested to see how it'd affect people's habits, if at all.

Not sure how you could try something like that on a small scale with a country with these issues like the US since people could just drive a town over, and a state would probably be too big of a sample size.

Where is the evidence that smoking has been reduced through taxes?

It's hard, logistically, to tax consumption at the margin. We can do it with income because it's highly documented. We tax smoking with a flat rate because nobody needs any of them.

It's not exactly a great idea to tax a hungry kid's only meal of the day.

Really, the only way you could logically do this is to track everyone's consumption of food, which is very problematic for various reasons... or by taxing certain types of food, which is more likely to shift the problem rather than solve anything.

It's probably easier to impact health by encouraging movement than decreasing food intake.

Stop subsidizing corn syrup, tax sugar, spend the money on youth fitness and sports programs. Sugar and Corn haven't had their tobacco moment...yet.

Agreed! Sugary drink taxes are really, really unpopular, unfortunately.

We live in a world in which it is easier to collect 'sin taxes' than to tax the rich.

The wealthy have resources to fight any attempt to collect a fair, let alone progressive, share of their earnings.

And yet, it might be rational in terms of social utility to increase the cost of acquiring alcohol. We face a challenge if we want to balance fairness and utility.

The optimal policy surely includes measures which go beyond making psychotropic substances harder to aquire, but I don't know what the answer is. We could spend money on therapy, but would it really pay for itself?

I have a problem with "sin taxes". On one hand I think its good that less people are smoking. Its a horrible habit and having less people smoking reduces healthcare costs for society and will add longevity to the many people.

Where I have an issue with "sin taxes" in general is that "sins" start to be widely stated and in general really hurt the working class. Take for example in California where gas is taxed to no end, for myself who works from home in software this doesn't really affect me as I only drive on the weekends, for a blue collar worker it becomes extremely expensive as their job forces them to drive and their lower income makes the gas cost increase outsized.

In addition in NY the sugar tax on soda seems really heavy handed, typically sugary drinks are chosen by families as they are cheaper than fresher alternatives, what this does is just raise the price on the lowest price flavored drinks for families that can least afford it. Education about obesity and its effects seem non-existent and it would be a better way to go about this than the idea that poor people are stupid and need bad things for them made more expensive.

Yes it hits poor people more. At the same time, gas prices have a very strong correlation to the purchase of gas guzzling cars.

https://www.scientificamerican.com/article/auto-sales-hit-ne...

> typically sugary drinks are chosen by families as they are cheaper than fresher alternatives

Sugary drinks are cheaper than water?

> Education about obesity and its effects seem non-existent

I really don't think that's true. The US (and to a lesser extent many other parts of the world) have had a growing obesity crisis for decades - everyone knows that eating too much food is bad for you, and that eating too much sugar results in obesity and diabetes. People buy these things because they are cheap and addictive - but they absolutely do know they are bad for them.

I'm of the opinion that the addictive nature of sugar means governments should be stepping in to take action, and I think dropping ridiculous subsidies for sugar and corn make a lot of sense, as well as a "sugar tax" for finished goods like fizzy drinks and candy. Education obviously must continue to play a part, but that alone simply isn't enough.

I'd wonder if sin taxes are naturally regressive, since higher pleasures (service, entertainment, exotic goods, travel, etc) come from being relatively wealthy, where so-called sinful pleasures are ones with a very low bar to entry.

Is that a problem?

I'm guessing the argument is that it puts the burden on disproportionally poor people, whom the tobacco and alcohol lobbies specifically targeted with advertising, etc. Like the way menthol cigarettes were pushed to the black community. Maybe the idea is to have those industries bear some of the sin tax burden? The linked page is a 404 for me, so I'm guessing.

> Total sin tax burdens are poorly explained by demographics (including income).

While two most-taxed clusters may be low-income, the researchers found a poor correlation between income and sin tax burden overall.

More detail from the paper:

> The second takeaway is that saying “sin taxes are regressive” or “sin taxes are progressive” largely misses the point. There is much more variation among households within income groups than across them in purchases of sin goods (Figure 3). Even among the lowest-income groups, the majority of households pay negligible amounts of sin taxes, and there are heavy smokers and heavy drinkers at all levels of education and income.

Antidotally, my roommate was a pack a day smoker. Switching from cigarettes to a vape saved them more a month than their last raise of 2 dollars an hour. If you have more then one pack a day smoker in a house, that both also drink, it's easy to see how fast these numbers go up.

While is sounds shocking at first, I'm curious why finding more occurrences of Pareto or 80/20 rule is still making headlines? It's almost like rather any deviation from that would be more surprising

Both tobacco and alcohol create significant negative externalities for society at large and hence should be taxed. The fact that they are vices is almost beside the point.

I'm ok with sin tax, but I don't think that they should require a camera for porn to be legal... (ie: porn vs prostitution)

A peculiarly characterized factoid. What proportion of taxes ought to be due to those activities in the article's view?

Broken link. Was there actually a study on that subject or was this just a way to start a conversation about taxes?

And 0.001% of households are billionaires and often pay no tax at all. Somehow, that doesn't seem fair to me.

Power law, same holds for taxes over! Somehow I doubt it's the same 10% though...

Page is giving me 404 Not Found

The people who buy something are the ones who pay the taxes on it?? Gosh.

In this country we have a right to do dumb things and make bad decisions. The Nanny State can't fix every problem.

This is a great encapsulation of “freedom to” at all costs without paying heed to “freedom from”.

This isn’t so shocking as history alone makes it clear society operates on aristocrats legalizing externalizing effort.

They own everything and role play as if making investment choices is work but… they own everything so the monopoly outcomes are guaranteed.

Figuratively the class warfare was fought and won, and effort to fight for the public was deflected back as selfishness.

Class aristocrat:

def todolist: While breathing: leverage wealth to buy more useful property to extract wealth selling disposable property

Source: me, an aristocrat with a patent who earns a few cents for every gadget sold in the US due to some math I wrote down to receive a masters degree. My work did not give rise to the physical phenomenon, nor does it really have anything to do with designing or selling gadgets. It just states an objective mathematical truth. Thanks to everyone’s political belief for enabling my retiring before 40.

I feel sin taxes are immoral but easy to implement against a minority of poor people who don't have the means or numbers fight back.

Why do you think they're immoral?

because cigarettes and alcohol are drugs.

What is your definition of drugs and why are drugs immoral?

not OP but I guess because they hit the poorer segment of the population and it's an income that comes from exploiting an addiction.

There is no sin tax for very wealthy people with very bad habits, like traveling with their private jets.

On the other hand as a smoker I am 100% in favour of the ban on smokes in public places.

Maybe more bans and less sin taxes could be a better option, I'm not sure myself, but I can see why someone could consider them borderline immoral.

Not the OP, but my argument would be that things should either be legal or illegal.

Fine if stuff has a naturally high price, everyone can't have a Tesla or a Ferrari, but if something is deemed to be morally OK (and therefore legal), it's not the government's place to then penalising people for spending their money on it.

If taxes from cigarettes and alcohol were ring-fenced purely for treating smokers, prevention campaigns & alcohol anonymous programmes etc then I might be in favour.

But for example — supposedly treating smokers costs the NHS £2.5bn per year (https://twitter.com/UKHSA/status/887261639720001536), but the duty on cigarettes brings in £9.9bn (https://www.statista.com/statistics/284329/tobacco-duty-unit...).

For alcohol — the overall budget of the NHS is ~£130bn currently. This article (2016) estimated that alcohol related cases cost the NHS 3.6% of its budget (https://www.theguardian.com/news/datablog/2016/jan/22/alcoho...) which, assuming the same now would be £4.7bn today, but alcohol duty brings in £12bn (https://www.statista.com/statistics/284336/united-kingdom-hm...).

Even accounting for other costs (e.g. accidents), the government is making a huge return on allowing these products to be sold, so it seems hypocritical to then punish people for using them, especially if people want to enjoy them in moderation.

Everyone should pay their fair share of taxes and to overburden a group of people because we don't like what they do (smoke, drink, etc) or who they are (poor) not only puts an undue burden on people already suffering for our moral objectives (quit smoking, quit drinking), but allows others (non-smokers, non-drinkers) to pay less taxes than their fellow citizens.

Wealthy people certainly can afford to smoke and drink all they want, it's just the poor people who aren't allowed with sin taxes. Just doesn't sit right with me.

Poor people are compensated by separate welfare programs.

It’s the downstream effects that concern me. Do sin taxes reduce consumption in aggregate? Yes.

But for those that it doesn’t, it means they’re spending more of their disposable income on their addiction and not things for the rest of their family.

In places that have free healthcare like Canada the sin taxes actually start to make a lot more sense. Heavy smokers and alcoholics are likely to use more healthcare resources compared to somebody who doesn't engage in those activities. So in my mind it seems "fair" for those things to be taxed higher.

However I have seen these sin taxes applied to areas where this is not as true. For example in Canada marijuana is taxed quite heavily. But marijuana isn't something that causes much physical harm or physical dependence like alcohol. So it's odd that it is also so highly taxed. Especially edible versions of it that don't have the associated smoking risk.

But I think overall as a whole in societies like this it can make sense. In places like America though maybe sin taxes don't make as much sense. You're paying a lot for your habit but are you getting any extra benefit out of it? If you need extra healthcare that is going to be on your insurance on your pocket.

I would compare the sin taxes also to the carbon taxes we have implemented in Canada. You pay an extra tax at the gas station on your fuel. The idea is that those taxes paid are earmarked for climate change initiatives. Now is that tax money actually being spent appropriately? Who knows. But it does make sense in some sense to disincentivize destructive activities and use the taxes to offset the cost of those activities.

"In places that have free healthcare like Canada the sin taxes actually start to make a lot more sense. Heavy smokers and alcoholics are likely to use more healthcare resources compared to somebody who doesn't engage in those activities. So in my mind it seems "fair" for those things to be taxed higher."

I'd recommend doing some digging here, I've seen many claims that such folks actually end up being responsible for lower lifetime healthcare expenditure due to earlier death and I'm sure myriad other factors

Does them living a shorter life mean they are cheaper? I feel like comparing someone who dies of lung cancer at 60 years old to somebody who lives to 90 isn't really a fair comparison. Sure that 90 year old may end up costing more in terms of healthcare, but if you compared their usage up to 60 they would not have used the same.

Someone who lives longer simply has more time alive and thus more time in the country where they may require medical care. But I don't think that means they are the same burden as someone who has a shorter life span but requires a lot of unnecessary care due to the unhealthy choices they made during their life.

I mean it seems entirely fair to compare since the drugs they're doing are playing a significant contributing factor to their health outcomes

Is this actually true? It seems to vary significantly by 'sin', and by level of consumption. Many smokers die at a younger age than non-smokers, and so end up financially burdening medicare for a fewer number of years. On the other hand, many other dietary habits that are not currently taxed as 'sins' have a long-term medical cost - e.g. diabetes and heart disease.

> other dietary habits that are not currently taxed as 'sins' have a long-term medical cost - e.g. diabetes and heart disease.

I have expressed this in another comment, but unhealthy foods are taxed here as well. Things like fruits and vegetables are not. However even with the taxes processed foods still end up being more cost effective. But I think that is a separate problem of its own.

I am not necessarily sure the argument that they have a shorter lifespan is a good one. Like sure someone may use more if they live 20 years longer, but if you compare two 60 years olds where one is healthy and the other is a heavy smoker it's almost guaranteed that the heavy smoker has costed society a lot more. Is it far to compare that same 60 year old smoker who just died to a 90 year old? That 90 year old got 30 more years of life. Sure they may have ended up costing more in healthcare in those 90 years, but they also alive 30 more years. To me that seems like a positive thing to strive for.

> Heavy smokers and alcoholics are likely to use more healthcare resources compared to somebody who doesn't engage in those activities. So in my mind it seems "fair" for those things to be taxed higher.

There are a lot of things that people do which fall in the same category. Unhealthy eating. Extreme sports. Unsafe sex.

Should we tax them all?

For unhealthy eating, certainly, why not?

For the other two it's a bit harder to directly tax those activities, but taxing indirectly it's definitely feasible: private health insurance and life insurance already have different pricing depending on amount of exercise, lifestyle, previous conditions, etc.

Unhealthy eating is already taxed higher here. Processed foods are taxed here whereas things like produce typically have no tax.

Extreme sports are nowhere near as popular as things like smoking, drinking, and unhealthy eating. And extreme sports still have the same taxes other material objects would have. If I go mountain biking there is a lot of expensive gear you're paying for which would be taxed at 15% here. Injuries from mountain biking at most usually result in some kind of musculoskeletal injury. They are not usually long term problems and don't involve anywhere near the amount of resources something like a cancer patient would require.

An alcoholic may drive drunk and injure someone else, they may have to go through multiple detox programs, they often end up in the hospitals for days, etc... And they also don't have the same benefits an extreme sport can have. Someone who does a lot of mountain biking is going to be a much healthier person. They'll require less doctor visits and overall are also probably mentally more healthy.

Really not sure what specifically unsafe sex means. What would be the "sin tax" there? They aren't purchasing something?

We are talking about taxing people's unhealthy purchases. Not taxing someone because they engage in an activity.

as a non American what always strucks me is that cigarettes are taxed because they harm the person smoking them - they are heavily taxed in my country as well and only the State can sell them in licensed shops, it's a State monopoly -, but guns and ammunitions are not.

>Processed foods are taxed here whereas things like produce typically have no tax.

Without (intentionally, anyway) taking any other position at issue here, I'm not sure this is a cromulent comparison. Processed foods are also more calorically dense, heavier per dollar, and ultimately less expensive per meal, even factoring in the tax. We can try to think about it like a policy lever, but if it's still less expensive than the alternative, it kinda feels like rent-seeking, given that eating isn't a habit one can just give up.

You are talking about a different thing here aren't you? I am talking about a tax applied to unhealthy foods but you are just talking about the price of processed foods being cheaper. One is about the government, the other is just about the prices things happen to be set at. The government isn't setting those prices.

You are right that often processed foods are cheaper, but that doesn't seem relevant to the sin tax is it? Maybe I am misreading what you are saying, but the idea is that the healthy foods don't get taxed and the unhealthy ones do. The fact that the unhealthy foods may still end up being cheaper doesn't really change that much? If they taxed the healthy foods it would just get that much worse.

I, what? Everyone has to eat. A "sin tax" on cheap bad food -- which is presumably cheaper because it's easier to create and less nutritive than healthy food -- doesn't strike me as a policy lever so much as a way to squeeze more money out of those who are already eating shittily for primarily economic reasons. They still have to eat, they'll just pay more for it.

I think we may be talking past one another because you're likely from a country that prioritizes its citizens' health in a way that we in North America don't. "Eating shittily for primarily economic reasons" isn't a purely North American phenomenon, of course, but I note that in parts of Eastern Europe, carrots and potatoes are practically free.

No I am Canadian, so I am still in North America. And while we do prioritize health more than America, we do still have a decent amount to consider when it comes to healthy eating still. I know in America processed food is quite a bit cheaper than it is in Canada, especially things like fast food. When I have been there and seen the prices on things like food and alcohol it's quite the difference.

Unfortunately though in Canada produce can still be cheap. We do subsidize produce in a lot of ways though. For example my relative has a farm. It's a relatively small farm, but he also pays almost nothing in taxes because of farm subsidies and exemptions he gets. Without those kinds of government benefits farming often wouldn't even be economical at all. However I believe even animal production is like this. In fact I believe animal production often gets even more subsidies than produce based farm operations in Canada.

However, I personally don't view a lot of these taxes in the same way as sin taxes. I view the taxes on unhealthy foods as a way to try and slightly subsidize the healthier foods. Is it 100% effective? Nope, but it does help to reduce their costs a bit. But you're right that this often can end up screwing over the poor people more than other groups.

I feel like this is a broader problem though. It seems like a good chunk of government policies screw over the people who are already the worst off. For example: if a millionaire gets a speeding ticket for going 20 over it barely is a blip on their radar. But if someone who is poor living paycheck to paycheck gets hit with one it can greatly impact them. And they can barely even afford to try and fight it in court because that may mean taking unpaid time off from work. This is just one example of where it seems like society is setup to feed off the middle and lower classes to keep the upper class prospering.

It doesn't help that a lot of our politicians are part of that upper class and don't understand how different of a world it can be in these other classes.

Groundbreaking theory - Set the legal age to smoke at 18 then increase this age by 1 year every year after.

Everyone who can smoke now gets to continue their quest to die of a debilitating cancer. Children are protected as it will never be legal for them and eventually my tax bill will start to drop as the 200 IQ galaxy brains die out over 50 or so years.

There, i've solved socialised healthcare in the sensible world.

Most smokers start before 18. Your plan may work anyway, because the way 16 year-olds start is by bumming smokes off their 18 year-old friends. So people would start at 17, 18, 19 as the legal age rose to 19, 20, 21.

Or slowly increment the tax over time. Until it’s impossible for anyone but billionaires to smoke. Maybe leave it at just the right amount so the 0.1% does it as a status thing and start dying out.

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