House Democrats’ tobacco tax hike could violate Biden’s pledge

A man smokes with the IQOS (I quit regular smoking) electronic tobacco warmer from the tobacco company Philip Morris.

Sébastien Kahnert | image alliance | Getty Images

House Democrats have proposed increased taxes on tobacco and nicotine products to help fund their $ 3.5 trillion spending plan.

The measure could increase current levies on cigarettes, cigars and roll-your-own and smokeless tobacco, according to a summary of the plan. They also proposed new taxes on vaping products.

Businesses typically pass so-called excise taxes – levies on specific products such as alcohol, gasoline, soda and tobacco – to customers with higher prices.

These tax increases could bring in more than $ 96 billion in revenue over the next decade, according to estimates by the Non-partisan Joint Committee on Taxation.

While health advocates applaud the plan, opponents say it violates President Joe Biden’s promise not to raise taxes for Americans earning less than $ 400,000 a year.

“A tobacco tax is probably the most regressive tax there is,” said Ulrik Boesen, senior excise tax policy analyst at the Tax Foundation. “There is no question that this is a tax on people earning less than $ 400,000.”

The White House did not immediately respond to CNBC’s request for comment.

More from Personal Finance:
House Democrats’ plan would close tax loophole used by crypto investors
IRS Extends Tax Relief for Hurricane Ida Victims in New York, New Jersey
House Democrats are proposing a top tax rate of 39.6% at these income levels

Americans living below the poverty line have higher smoking rates than the general population, according to the Centers for Disease Control and Prevention. These people can smoke for twice as many years as those earning three times that level of income.

One of the proposals, doubling the tax on cigarettes, can cost someone who smokes a pack a day an additional $ 400 a year, depending on where they live, Boesen estimates.

However, the proposed tax hikes could pose bigger problems, as Boesen detailed in a Tax Foundation analysis.

“We’re talking about $ 100 billion taken from a pretty narrow part of the market – just nicotine products from tobacco,” he said. “It’s a bit risky to rely on this long-term income because every year there are fewer and fewer smokers. “

The Food and Drug Administration has proposed a ban on menthol cigarettes, suggesting it could cause 923,000 US smokers to quit, study finds.

The FDA is also reviewing authorizations for vaping products and has denied more than 90% of applications, Boesen said.

“A significant part of this market is at risk,” he said. “And then obviously the [tax] income is threatened. ”

There are more than 34 million smokers in the United States and more than 16 million live with smoking-related illnesses, according to the CDC. Cigarettes are the leading cause of preventable illness, disability and death in the United States, causing 480,000 deaths per year.

Source link

About Margaret Shaw

Check Also

United States outlines strict regime for e-cigarettes with first clearance

The clearance of the first e-cigarette by US regulators this week has been described by …

Leave a Reply

Your email address will not be published. Required fields are marked *