Obama's Cigarette Tax Puts the Lie To His No New Taxes Pledge

By Peter Roff, Thomas Jefferson Street blog

Former Sen. Russell Long, the Louisiana Democrat who for years headed the powerful Senate Finance Committee, used to say that the strategy for increasing federal revenues was grounded in a time-honored D.C. maxim: "Don't tax you. Don't tax me. Tax that fella' behind the tree."

In essence, what Long was talking about was finding ways to tax "someone else," ideally someone who was not in a position to complain about it much or, even better, exact retribution in the voting booth.

As long as "that fella' behind the tree" had money, it worked as a strategy. Unfortunately for a lot of people, it doesn't work anymore. And it can't, because federal borrowing and spending are, as a percentage of Gross Domestic Product, rising too high.

In just a few months President Obama and a Congress controlled by the Democrats have increased non-defense discretionary spending by 8 percent, and then by an additional 10 percent and then by who knows once Congress finishes with the budget. The national debt, says the non-partisan Congressional Budget Office, will double over the next five years. And triple not too much longer after that.

To balance the books, Obama and the Democrats are going to have to find sources for new revenue—which is the polite way to say "Raise taxes."

This effort to find new revenues should be frustrated by what Obama said was his "firm pledge" not to raise taxes on anyone making less than $250,000.00 a year. "Under my plan," Obama said September 12, 2008 in Dover, N.H., "no family making less than $250,000.00 a year will see any form of tax increase." To emphasize the point he continued, "Not your income taxes, not your payroll tax, not your capital gains taxes, not any of your taxes."

He might have well said, "Read my lips." Like a bad April Fools' Day joke, the federal excise tax on cigarettes increased April 1, 2009 by 156 percent (or 61 cents per pack). And this is a tax that everyone who smokes will pay, despite the fact that, according to the taxpayers' lobby Americans for Tax Reform, one in four smokers live below the poverty line and 55 percent of smokers can be defined as "working poor," which means they make something less than $250,000.00 per year.

For all the talk of "repealing the Bush tax cuts" and "increasing the taxes on the wealthiest Americans," there is just not enough money in that economic cohort—even at tax rates that are confiscator—to pay the bills. But no worries. It is now clear that what Obama said, with apologies to the late Sam Goldwyn, wasn't worth the paper it was printed on.

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