Disclosure: I have smoked a cigarette in my life.  Guilty as charged.  Surely, as I write this, the liberal death squads (Yale Law Degrees-In-Hand) are marching for the nearest courthouse to accuse me of genocide, infanticide, and fungicide.

That being said, I’m still amazed how quickly people – nay, legislators – jump to “revenue enhancements” every time there’s a budget shortfall.  The bigger the deficit, the greater the panic to fill the hole.  Without getting into President Obama’s doomsaying and fear-mongering on the economic and financial fronts, it’s easy to see examples of myopic economic and fiscal policy right here at home: Florida.

Let’s start with the most comical press conference I’ve seen since, well, this one.  Taxing internet purchases in Florida (HB 329) would amount to the single largest tax increase in memory.  While I’m sure the good Republican senator and Democrat representative have their constituents’ best interests at heart it’s tough to imagine them believing their own nonsense about “leveling the playing field” and a sales tax on internet purchases “not being a new tax; just capturing a tax and many taxes that people owe us” and it just “streamlines” Florida’s tax revenue in a more “fair and equitable” fashion.  Okay, let me try and wrap my puny tax-paying head around this.  If I buy something on the internet today it’s not taxed.  After this bill, it will.  That’s a new tax.  The only thing this tax would “level” is businesses in Florida that rely on internet sales and Florida consumers that buy goods on the internet.  It’s become commonplace to hear things like, “We have never had the problems we have now” but imposing higher burdens on consumers right when they need every break possible is irresponsible and sophomoric.  ”We see hope in this bill,” Rep. Vasilinda said.  Well, I for one hope she’s kidding.

Moving away from taxing the internet (and all those tax-evading tubes) and on to our main topic, there have been a few proposals for an increase in Florida’s cigarette tax (HB 887, 11 and SB 1840).  To avoid getting bogged down in the specifics of any one bill, I’ve decided to address them collectively.  Now, I know what you’re thinking: vitriolic, pimple-faced college Republican kid is going to tell me how bad ALL taxes are.  Think again, mon frer.  

The truth is, not every tax is evil (gasp!).  Surely there are some more evil than others – and that’s why we give the bad ones names like “Death Tax” or “Marriage Penalty” or “Income Tax.”  But from an economic perspective, taxes can serve two important functions.  One is almost purely economic and the other has social implications as well.  Those are internalizing otherwise external costs and improving public health by shaping behavior.

First is the notion that some behaviors cause “externalities.”  These can either be good or bad.  When I get my flu vaccine, that makes me less likely to transmit the bug to others; and likewise other vaccinated conscientious citizens are less likely to make me sick.  That’s a “good thing,” as Martha Stewart would say.  However, some externalities are not so good.  The classic example is the coal plant or factory that spreads pollution all around.  They don’t care about what happens to all that orphanage right next to them – it’s none of their business.

The solution then is to both subsidize the good stuff (free flu vaccines) and tax the bad stuff (pollution).  Same goes for cigarettes.  There are some real costs imposed on society from the use of tobacco products.  There’s a greater chance of heart and lung disease along with stroke and other ailments that, in the era of Medicaid and Medicare, for which the public (read: the taxpayer) foots the bill.  Now, the best kind of tax (in the general sense of paying the government money) is one where the users (in this case, smokers) pay for their share of the burden.  These are commonly referred to as “user fees.”  This is kind of thing you pay for visiting a public park, a museum, or whenever you pay a toll – in theory, I have my own gripes about toll roads.  That kind of math is simple.  Fee equals the cost of running the park divided by a rough estimate of how many visitors you expect.  Of course there’s some fine tuning to be done but it works.

With cigarettes and the social costs of smoking, however, it’s not so simple.  Chances are that the person buying the cigarettes today isn’t the one getting treated for lung cancer today (we hope).  Therefore, the mechanism doesn’t work.  We wind up imposing a burden on today’s smokers for what yesterday’s (and yester-decade’s) smokers did.  Meanwhile, the patients causing all the extra drain on the system aren’t paying in anymore – they get a free ride.  This is the fundamental problem with cigarette taxes.

As if that weren’t enough, by raising the price of cigarettes, over time, fewer packs will be sold.  Tax revenue will then decrease.  Not to mention that almost uniformally the lower your income, the more likely you are to smoke.  So the tax winds up being both regressive and self-defeating.  No one’s saying that fewer lung cancer patients in the future would be a bad thing.  Not at all.  But relying on funding from an unreliable source is, at best, short-sighted.  You want to improve public services?  Cut down on bureaucratic nonsense and prosecute fraud.  You want to reduce the incidence of smoking?  Smoking bans and education on the risks seems to work just fine.

It’s pretty simple: don’t kick people while they’re down.  Yes, we’re in a recession.  Florida’s been hit as hard as anyone (California doesn’t count since they seem to punish themselves).  But that doesn’t mean that we should, in the lean times and under duress, do what we wouldn’t do in any other year.  To quote my favorite Republican president, Calvin Coolidge, as he reflected on the Great Depression and FDR’s New Deal, ”When depression in business comes we begin to be very conservative in our financial affairs.  We save our money and take no chances in its investment. Yet in our political actions we go in an opposite direction.”