April 09, 2004
The taxes of sin

Governor Perry finally laid out his school finance reform plan yesterday, and I will give him credit for one thing: he's finally recognized that some new money needs to be injected into the system. Reaction to his announcement was better than I expected, partially as a result of this. Coverage is here, here, here, here, and here.

Of course, a lot of that new revenue comes from taxes focused on small segments of the population - smokers, gamblers, and now strip club patrons. There's been a lot of joking and some grumbling about that latter, but let's face it: There's not going to be any widespread objections to these proposals because their constituencies are too small and scattered. Taxing them is easy and painless for politicians to do, at least until they eventually prove to be the unreliable streams that critics said they'd be. I hate to agree with anyone from Phillip Morris, but this quote from the Statesman article echoes a lot of things I've said here before and still agree with:

Jamie Drogin, a spokeswoman for Philip Morris USA, said the tax hike would bring unintended consequences, including increased Internet purchase of cigarettes, as well as smuggling from nearby states with lower taxes.

"Over the past few years, as many states have risen their excise taxes, what we have seen is a decrease in legitimate sales and an increase in illegal or contraband activity," Drogin said.

She added that tobacco sales are declining 1 percent to 2 percent a year and would not be a reliable source of income for funding public schools.

"What's going to happen to the state of Texas is they're not going to get the funds that they expect, and the second problem is what they are going to see is an increase in illegal activity."

As for gambling, I just want you to read the following from the DMN article:

To help boost profits from the state lottery, which now provides nearly $1 billion a year for public education, the governor suggested that lottery players for the first time be allowed to use credit cards.

If there's been a more misguided or less moral public policy idea floated anywhere recently, I'd rather not know about it.

Posted by Charles Kuffner on April 09, 2004 to Budget ballyhoo | TrackBack

Ain't that the truth. Thanks, Kuff, for the superb job you do covering these issues. Of course, they will show up in our states also. I'm sure school teachers and administrators in Texas are sleeping easier, with these assured sources of additional revenue available indefinitely into the future--especially since the Bushies have underfunded Title I programs for this fiscal year more than $4 billion than the President said he would fund.


Posted by: charles on April 9, 2004 10:20 AM

"Now honey, it's true your friend saw me going into the Strawberry Mongoose Lap Dancing Emporium every night last week -- but I only did it so that Bobby's school could afford a new computer..."

Posted by: lord marmite on April 9, 2004 12:31 PM

The motto for strippers and teachers....I do it for the children.

Posted by: Patrick on April 9, 2004 1:41 PM

Yep -- round up the usual suspects. Personally, even though this won't directly hit my pocket book at all, I am very much opposed to directed taxes like these which are designed to make a minority pay. The American constitutional system was designed to protect a minority from the tyranny of the majority, and in the case of tax policy, it is failing miserably.

No new taxes should be levied, IMO, unless they are ready to impose them on *all* people in an equitable manner, and in a proportion to what they spend and/or earn.

Posted by: Tim on April 10, 2004 9:02 AM