Fat new tax

The American Cancer Society’s proposed tax on cigarettes is California fiscal planning at its worst

Normally, I would wait until later to protest the proposed $2.60-per-pack tax on cigarettes being pushed for next fall by the American Cancer Society and other powerful health associations. But it’s such a rotten idea I don’t want to delay.

Huge new taxes on specific groups of people create weird backlashes—in this case, probably skyrocketing sales of black-market cigarettes as smokers find creative ways to avoid this grab at their wallets.

But, far worse, the proposed $2.1 billion tax, which will hit a shrinking population of mostly working-class and middle-class Californians, is horribly backward. It punishes smokers, yet it uses scandalously little of the windfall on research into lung cancer or other diseases associated with smoking—just 2 percent would go to that.

Instead, in one of the greater stealth moves I’ve seen in a while, this measure would transfer money from smokers’ wallets into the wallets of illegal aliens. In our hopelessly PC world, we aren’t supposed to talk about illegal immigrants anymore. But let’s do it anyway.

The measure achieves this stealth transfer by pledging the vast majority of the $2.1 billion to emergency-room care as well as to health coverage for children—two services that, in California, provide massive assistance to illegal immigrants.

California already pours more money into free health insurance for children than any other state. In fact, California’s free and near-free health-insurance programs for children, including Healthy Families and others, are so generous that families need not be poor to qualify. Nor do they need to be legal residents. Under Governor Arnold Schwarzenegger, the program has swelled, just as it did under Gray Davis.

John Graham, director of health-care studies for the fiscally conservative Pacific Research Institute in San Francisco, told me: “If your child hasn’t got health care in California, you are a negligent parent. There are 900,000 children who qualify for Healthy Families and other programs but are not enrolled. They are eligible but still not enrolled due to parents’ inattentiveness; laziness; or the feeling that the kids are healthy, so they don’t give a hoot.’’

Smokers shouldn’t have to pay for that mess. Graham, who will soon release a research paper on California insurance, said, “The number of children not insured, who are not eligible, is probably very, very close to zero in California. We don’t have a crisis of coverage here. We have a crisis of parents not taking appropriate parental action.”

The proposed tax would take an estimated $405 million each year from smokers to fund yet more insurance for children. Some newspapers have reported that this would “fill the gap.” How typical. Throw somebody else’s money at a problem rather than deal directly with the problem.

The other absurd feature of the proposed $2.1 billion tax on smokers is its intent to spend vast sums on emergency-room care. A staggering $902 million each year would be taken from smokers and diverted to ERs.

As Graham noted, “If this were a rational tax, it would go to programs on smoking cessation and curing lung cancer. But it is not rational. The overuse of emergency rooms in California—the use of the system is highly biased toward illegal immigrants and not toward smokers.”

Illegal immigrants badly overuse ERs rather than utilizing often-free local health-care clinics or find a family doctor. This is a very bad habit that cries out for reform, not encouragement. California should not spend another cent on ER funding. It instead should get immigrant families to stop using incredibly costly ERs as their substitute for a family doctor.

Again, we are not supposed to be talking openly like this. However, if the overuse of the ER system by people who do not have an emergency were halted, we’d quickly discover that taxpayers are pouring more than enough into California’s ER system.

And the American Cancer Society’s plan is foolish for this final reason: The tax would not help to reduce the number of smokers, as hefty cigarette tax hikes once did. California has whittled its population of smokers down to a much smaller bunch of hard-core cigarette addicts.

Despite all this, I think the proposed measure has a real chance with California voters next fall. Californians love taxing smokers. Smokers, after all, are the only people you can be openly bigoted against with the blessing of society at large.

So, let’s create a fat new tax that spends a paltry 2 percent on research into lung cancer and other smokers’ diseases, that rewards the growing misuse of ERs, and that throws more money at health insurance for children who should have been signed up for existing insurance by their parents long ago.

Sounds like a classic California fiscal plan to me.