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Tough times call for tough measures. Now, states with cash flow problems are putting on their thinking caps and inventing new ways to capitalize on revenue opportunities.
One such proposed plan is based on lessons in morality. A ‘sin tax’ has been brewing ideas for collecting taxes on the vices of the general public. Here is a look at the current state of such imposed sin taxes in a number of states around the country.
- 25 states have been capitalizing on sanctioned gambling establishments by either introducing new facilities or expanding existing ones.
- 22 states have increased their taxes on tobacco products in the last year, including South Carolina, which has had a small $.07 tax in place for more than 30 years.
- 7 states have imposed new taxes on alcohol or raised the tax on existing prices.
- 3 states have contemplated a ‘pole tax’ which would be incurred by patrons of pornography, strip clubs and the services of escort. (Pennsylvania, Georgia, Texas).
- Several states including Colorado, Washington and New York have considered instituting taxes on the sale of candy and soda products.
- Nevada’s State Senate has considered taxing and further legalizing prostitution.
- California’s government has been pursued by advocates of legalized marijuana and the potential for the revenue sales tax on pot would bring in.
Will the Sin Tax Work?
Experts believe that the only way to raise more revenue is to raise income taxes and many feel that taxing people who have vices is fair play. On the other hand, back during the Great Depression, the Prohibition did not necessarily decrease the amount of drinking people did but there was a significant increase in the participation of unlawful activities. Prohibition ended when new jobs needed to be created and revenue from sales tax was needed.
Sin taxes may not change how Americans operate, especially since the tax amount will not likely be very noticeable. The demand for cigarettes and soda will keep people buying despite an increase in taxes. Essentially, if consumers are willing to pay, there is definitely revenue to be generated.
While there is little possibility of the plan backfiring, if taxes become so high that they force people to stop eating junk food and drinking alcohol, the States will suffer even more by a loss of revenue from product sales. Furthermore, the manufacturers of these products may be forced to cut back their work forces, thus raising unemployment. The financial troubles of many states in the country have forced the hands of State officials who now need to prioritize and consider other options for balancing the budget, even if it means pursuing those with vices who wouldn’t mind pay just a little more for something they have to have.
Readers: Do you think the so-called “sin tax” is a wise way for state governments to raise more money? Why or why not?
{ 15 comments… read them below or add one }
I do think it is a wise way for states to earn money. It’s good marketing!
1 Blessed is the one
who does not walk in step with the wicked
or stand in the way that sinners take
or sit in the company of mockers,
2 but whose delight is in the law of the LORD,
and who meditates on his law day and night.
3 That person is like a tree planted by streams of water,
which yields its fruit in season
and whose leaf does not wither—
whatever they do prospers.
Psalm 1: 1-3.
@Roshawn,
Could you expound a bit? I might be missing the obvious, but I don’t get how establishing a sin tax is good marketing. Or maybe I am missing some satire. Hmmm.
@Cedric,
Great passage. I am inferring that you are saying that if one delights in the law of the Lord, and avoids loose company he/she will not have to worry about such things as sin taxes. Right?
Exactly Joe. I don’t think I could have said it as succintly as you just did.
@Joe
What I am saying is that taxes certainly are not popular, so to couch these taxes as “sin” taxes, it like saying… “yes we are taxing but only taxing bad stuff.” From a PR standpoint, I think that may sit better with more of the electorate than “wealth-redistribution taxes,” “death taxes,” or even sales taxes.
Thanks Roshawn,
OK. I get it now. If there is such a thing as an acceptable tax, the “sin” tax could be it.
Sin Taxes are SUCH B.S. (I would love to use worse words but “bythebook” prevents me). Sin taxes are simply a way to penalize what the majority deems as unhealthy or unmoral.
There was another organization that made huge profits off vice who the government has now modeled quite successfully. They are referred to as the Mafia.
Why is it not okay for them to do such things but okay for the states? Though some see “sin tax” as a way to discourage a designated wrong doing in reality it protects and promotes it ultimately to the demise of the state. The scripture warns about using the wages of a prostitute as an offering. How can a government and country prosper in this way. When WA state brought in the lotto they said the funds would be used to pay for education and yet the school systems are still crying for money while the lotto florishes.
What you make your money at is your profession. Do we want the profession of our states to be gambling, tabacco and pot distribution (oh yeah, they used to call them pushers), and prostitution? And, while it is called vice and the government receives huge revenues from those who engage in their definition of vice we seldom hear praise and thanks for the large support the gamblers, smokers, and alcoholics make to our society by providing the revenue to gov’t programs and services. We have allowed ourselves to get to the point were without vice our states would go bankrupt.
Thanks for the post. A subject that makes my blood pressure pills necessary
@Evan,
Thanks for respecting other “bythebook” readers by reigning in your language.
To me, it is all hypocritical. For example, those who assess the “sin taxes” are not really interested in helping smokers break the habit; they are simply looking for a more palatable way to raise taxes. I wonder, by the way, how many of the legislators have no moral issues with these “sins” in their own lives.
@Carol,
I never compared the government to the Mafia before, but you make an apt analogy.
As I commented to Evan (and as you point out), government is hypocritical, assessing “sin taxes” while profiting from sinful activities such as operating a lottery … don’t most people consider gambling to be sin?
Taxing is zero percent about morality and 100% about how to get more money into the government coffers. Here is a thought: instead of looking for more revenue, try spending less. Hmmm.
Some ‘sins’ are expensive enough already, but a further taxation of these will not cause a decrease in the public’s spending for them. Its very unlikely people will stop drinking so much soda and watching so much pornography.
I think sin tax is great. Let’s look at tobacco for example. If the extra cost stop even a few people from smoking, it is good for everyone. The smoker and everyone around him/her will be more healthy in the long run. The state doesn’t receive any sin tax income, but it also doesn’t have to deal with the future health issues.
I take great interest in reading the comments of the other readers on this subject. As Christians our #1 goal is to preach Jesus and to seek and save the lost. I wonder if outspoken desire to separate them for higher taxation facilitates this goal or if it merely comes across as judgemental.
I think Joe is on track when he says the first step is to cut spending.
@retireby40,
Your example makes perfect sense, and may actually help some people stop smoking (or whatever “sin” is being taxed). To that degree I agree with you. The bigger problem is that every time legislators find a way to squeeze money from their constituents, they feel they have license and even an obligation to spend that money. Do they ever use sin tax or any other tax to actually reduce the deficits? I doubt it.
@Paul,
I agree IF they actually use the funds to decrease the deficit.
I’m not sure whether they work to reduce the so called sins, but they are a great way for governmetns to raise money and its politically a lot easier. Trying to raise income taxes is hard; taxing cigarettes or gambling is really easy with voters, because those who are about such things (the middle-class) don’t tend to smoke much or gamble. These taxes are really a tax on the poor – those who gamble, smoke and drink the most.
it could be a marketing ploy to justify the new tax increase. Sin taxes do not have to be a bad thing. if you want to drink stuff out of plastic bottles than pay an extra tax for the problems that occur for using plastic. I could go on an on for hours or pages why this is good and bad. have a good day everyone
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