Unintended consequence or deliberate attack on the poor and elderly?

[David S]

http://www.detnews.com/apps/pbcs.dll/article?AID=/20060606/POLITICS/606060397

Cigarette tax singes poor, old
State slaps 3,500 more smokers with bills for buying cartons online.
Sarah Ryley / The Detroit News


MOUNT CLEMENS -- When Marilyn Mostek, a senior living in a subsidized apartment, heard she could save $20 on a carton of cigarettes by ordering from an out-of-state Indian reservation, she thought she had found a clever way to save money.

Those savings went up in smoke on May 19 when she received a bill from the state of Michigan for $511 in unpaid cigarette taxes -- nearly half of her fixed monthly income. Her neighbor, Robert Stutsman, received a bill the same day for $744.

Mostek, 69, and Stutsman, 75, are among 11,000 Michigan residents who over the past year and a half have felt the pinch of a state crackdown on people who have avoided Michigan's cigarette tax by buying from out-of-state vendors online.

The bills, averaging $1,787, have hit the elderly and poor particularly hard.

[David S]

Before the tax was passed it was pointed out that it would affect the poor and the elderly the most.

[David S]

It's an effort to aid the poor and elderly.

Ask the poor elderly lady who got stuck with a bill for $511 how much it "aids" her.

[David S]

Lets take an example; Rich man earns $100,000 per year. Poor man earns $10,000. Both men smoke a pack a day. At $2.00 per pack the annual tax for both men is $730. The effective tax rate as a percentage of income is as follows:
Rich man  0.73%
Poor man  7.3%

Its odd to see so many Democrats supporting such a regressive tax.

[David S]

Look at the underlying rationale behind this tax: Government through medicaid is responsible for the healthcare costs of the poor, therefore government has the right to control unhealthy habits of all citizens. In this case the control is to apply extraordinarily high taxes on the unhealthy product, cigarettes. But couldn't the same argument be made for all products the government deems to be unhealthy? Foods that are high in saturated fat and cholesterol certainly contribute to health problems. Couldn't the government use the same logic to apply extreme taxes on those products as well. Today you can get a bacon and egg breakfast for maybe $5.00 at many restaurants. If you applied a similar tax to that it would raise the price to about $15.00. And how about cheeseburgers, french fries, pizza, tacos, ribs, fried chicken etc? Do you want government using the power of taxation to force you to eat only food the government deems OK? At what point do we stop calling this place "The land of the free"?

[David S]

I would be open to the idea of an unhealthy food tax to help pay for the cost of health care.

Please tell me you're joking.

Ditto!!!!

Its  shocking to me that people are so readily willing to hand over their rights. I'm not singling out NYM90. My own brother has expressed similar thoughts.  But it really makes me think that freedom in America is rapidly approaching its end.

[David S]

BTW lest you guys think that old David S has slipped a cog and is in the advanced stages of geezer dementia by suggesting that government might want to tax fast food:

 2005 House Bill 5264 (Impose fast food surtax)

Introduced by Rep. LaMar Lemmons III on October 6, 2005, to impose an extra 2 percent sales tax on purchases made at fast food restaurants. The money would be deposited in a new state childhood obesity prevention program fund. The bill does not specify how that money should be used.
Source http://www.michiganvotes.org/SearchLegislation.aspx?CategoryID=40

[David S]

BTW lest you guys think that old David S has slipped a cog and is in the advanced stages of geezer dementia by suggesting that government might want to tax fast food...

(/quote]

We WERE worried there for a minute!

LOL Thanks for the vote of confidence my friend.

[David S]

How would an insurance agency prove that a person lives an unhealthy life Dazzle?

BMI, perhaps.

I have no problem with DIRECTLY assessing people for the costs of their choices, through things like higher insurance premiums for risky behavior DIRECTLY related to what is being insured.

But I don't think the government should try to regulate legal behavior through taxes.

Maybe they just make you take a physical before they insure you. They can easily check for health indicators like blood pressure, sugar, etc.

[David S]

How would an insurance agency prove that a person lives an unhealthy life Dazzle?

BMI, perhaps.

I have no problem with DIRECTLY assessing people for the costs of their choices, through things like higher insurance premiums for risky behavior DIRECTLY related to what is being insured.

But I don't think the government should try to regulate legal behavior through taxes.

Maybe they just make you take a physical before they insure you. They can easily check for health indicators like blood pressure, sugar, etc.

I'm glad to see you favor punishing people for genetics Mr. "Libertarian".

HUH How did I do that?  I'm talking about insurance companies checking your health before they insure you, not the government.

[David S]

How would an insurance agency prove that a person lives an unhealthy life Dazzle?

BMI, perhaps.

I have no problem with DIRECTLY assessing people for the costs of their choices, through things like higher insurance premiums for risky behavior DIRECTLY related to what is being insured.

But I don't think the government should try to regulate legal behavior through taxes.

Maybe they just make you take a physical before they insure you. They can easily check for health indicators like blood pressure, sugar, etc.

I'm glad to see you favor punishing people for genetics Mr. "Libertarian".

HUH How did I do that?  I'm talking about insurance companies checking your health before they insure you, not the government.

I know. But many people are predisposed to pressure, sugar, etc due to genetics. Should they be punished because of their misfortune?

Well lets say you are the insurance company; Senator States Friendly Insurance Company. Two guys come to your office looking for insurance. One is the picture of good health, young athletic and in excellent shape. The other is old, wheezing like crazy and shows symptoms of malaria, small pox and the plague. Would you charge them both the same rate?

The point is the insurance companies are in business to make money so they have to charge enough premiums to cover the likely costs and hopefully return  at least  a small profit. If they charge the old guy the rate for a young healthy person they will probably lose money. If they charge the young guy the rate for a geezer he will likely tell them to shove it and do business with a competitor. So they have to charge each one the appropriate rate for a person in their condition.

One way around this is group insurance such as your employer might buy for the employees. In this case the insurance company knows that some folks will need more care and others will need less, but on the average they can come out ahead. 

[David S]

Young people, like you have described have been known on many occassions to be diagnosed with cancer, have a heartattack or some other terrible malady. George Burns smoked cigars for many many years and what did he live to, 99 or some such?

All of that is true, but the insurance companies have to play the odds, and the odds say the smoker will need more care. I know you understand that an insurance company cannot operate for long if its losing money and its a delicate balance they have to achieve. Don't charge enough and you go broke. Charge too much and you won't get any customers.

How would the Senator States Friendly Insurance Company do it?