Donna Peeples writes:
I have seen a lot of articles in the paper about taxing sodas and foods that are bad for you. I say, “Why not?”
I used to be a smoker. At one point, I was up to two packs a day. When New Jersey raised their cigarette tax, I stopped because my cigarettes were almost twice as expensive as when I had started smoking. I couldn’t afford it anymore. You know what? It was the right choice. I am healthier today because I stopped smoking. And I might not have done it if cigarettes were the same price as before.
I think this idea of taxing unhealthy behavior is a smart one. I think we should tax things that make us sick: cigarettes, alcohol, fatty foods and sugary foods. I know that people don’t like the idea of the government telling them that they shouldn’t do things like eat foods that are bad for you but all of these things are adding to our health care problem. I don’t think it’s fair that I should have to pay for health care for people who didn’t stop smoking or who eat too much. And I have read that most of the cost of health care in the US is to pay for diseases and sicknesses that could have been prevented with a better lifestyle.
I’m not saying that you shouldn’t be able to buy cigarettes, beer and candy but I do think if you do continue to buy those things, you should pay more. Maybe some people will stop because of the cost. And those that don’t will pay for their own health care. If this happens, maybe we won’t have to raise income taxes to pay for health care.
This week, there’s been a considerable focus on a number of proposed “sin taxes” including those on soda, cosmetic surgery and plastic bags. In theory, sin taxes are meant to prevent certain kinds of behavior – whether or not they accomplish it is a whole other story.
I realize that nobody wants to pay extra taxes. So, putting aside for a moment the question of whether you want to pay extra taxes, let’s focus on policy. Assuming that we’re going to continue to have sin taxes (which is a pretty good assumption), think for a moment about the policy behind the taxes. With that in mind, today’s Fix the Tax Code Friday question is:
When it comes to sin taxes, is it more fair to tax behaviors that affect only yourself (like cosmetic surgery) or behaviors that affect others (like using plastic bags)?
When New Jersey Governor Corzine and the legislature were scrambling to find ways to fill the holes in their budget, it was clear that they wanted to utilize “sin” or “vice” taxes as much as possible. Unlike income taxes which affect everyone, sin taxes only affect people who engage in certain behaviors. The behaviors considered “sinful” vary from state to state but generally include drinking and smoking. New Jersey, however, added another vice to the list: gambling.
Yes, gambling. But not the Atlantic City quarter slots kind of gambling (yes, I said quarter slots can you tell that I’m not a risk taker?).
A more sinful, sinister kind of gambling: playing the lottery.
Beginning in 2009, New Jersey will begin taxing lottery winnings – something the state has never done before – at a maximum rate of almost 11%. I know what you’re thinking: “taxgirl, beginning in 2009? Aren’t you a little late to the party? It’s July.”
Yes, I know it’s July. The law took effect July 1 but lottery winners are taxed on the winnings retroactively to January 1. That has some lottery winners furious.
But players dollar scratch cards can relax a little: only prizes of more than $10,000 will be affected. Tax rates will begin at 1.4% and increase to 10.8% depending on the amount of winnings. Other tax provisions based on filing status, etc., will apply.
While lottery winners are outraged over the new law, including recent winners of the Mega Millions jackpot, the state is fairly confident that the law will stay “as is.” The reality is that lottery winners make up a small percentage of the state’s voters taxpayers and it’s not a cause that many citizens will rally around. The state is betting (pun completely intended) that a tax increase on the beneficiaries of what’s considered a stroke of luck will not earn much sympathy from taxpayers who are already concerned about their own tax burdens.
What do you think? Fair or no?
There’s still time to participate in the “sin tax” survey… It only takes a few moments of your time and it’s completely anonymous. Sound off on sin taxes – I’ll be posting the results this week.
