It’s budget season! And in case you haven’t heard, Democrats on Capitol Hill are proposing a 10-year, $3.5 trillion spending plan that they hope will invest more in education, health care, child support and infrastructure – all while also taking steps to help offset climate change.
The spending plan is likely to be divided along party lines, so if it’s to pass, Democrats are likely going to have to convince all 50 of the Senators who caucus with the political party to vote “yes” on it and then have Vice President Kamala Harris serve as the tiebreaking vote. That’s not too surprising given the size of this spending plan and what it’s hoping to accomplish. What is surprising, however, is how the Democrats hope to fund this plan. Specifically, part of how they plan to fund it is by raising taxes on tobacco products.
While the proposal is being lauded by doctors and healthcare workers, it presents a bit of a sticky situation if you refer back to some of President Joe Biden’s campaign promises – notably how he won’t raise taxes on anyone making less than $400,000 per year. While an excise tax on tobacco won’t necessarily impact any taxes on income that Americans are bringing in, it will raise taxes – albeit in a different way – for many Americans making less than $400,000 per year.
Why Tobacco?
Democrats say that the excise tax on tobacco is expected to raise nearly $100 billion in revenue over the next 10 years. And this proposal calls for doubling the cigarette tax. According to some estimates, for those who smoke a pack of cigarettes a day, that could amount to an additional $400 spent on tobacco products per year should this provision pass. Being that Americans at or below the poverty line have higher smoke rates than the rest of the population, this would equate to a tax hike – and it’s one of the ways opponents of this plan are attacking it.
Another criticism of this tax hike is the fact that fewer and fewer Americans are smoking in the U.S. each year as they become more aware of the health consequences and costs. It’s estimated that there are currently about 35 million smokers, and this number continues to decline year after year. Should an excise tax such as this go into effect, there’s reason to believe that many smokers would quit due to the higher cost. If that happens, then it becomes murky if this tax would really be all that effective in raising $100 billion over 10 years.
Will it Pass?
There are still some big hurdles to even getting the $3.5 trillion spending plan out for a vote, let alone passed. The biggest hurdle is moderate Democratic Senator Joe Manchin, who has already voiced his concerns about the bill. Without Manchin, and assuming this won’t receive bipartisan support, this bill doesn’t have a chance.
