The Establishment killed cig tax Prop. 29

June 25, 2012

By John Seiler

The backers of the Proposition 29 cigarette tax increase finally snubbed out the butt of their vigil over the June 5 vote. It lost by just 28,000 votes.

Proponents blamed the $47 million spent by the Big Tobacco companies to defeat the measure. Lance Armstrong, the bicycle champion still fighting doping allegations from his racing days, said, “Big Tobacco lied to voters to protect its profits and spent $50 million to ensure it can continue peddling its deadly products to California kids.”

Actually, what really defeated the measure was the state’s political Establishment, led by the Los Angeles Times and the California Budget Project. The Establishment realized that jacking up cig taxes $1 a pack to raise $735 million a year and give it to an new unaccountable cancer research bureaucracy only would worsen the state’s fiscal mess.

The Establishment understands that California is paddling toward Greek fiscal territory and any extra tax money that can be scrounged up has to go to solving the budget mess. Indeed, on June 8, the Times even ran an extra editorial, “The wrong cigarette tax,” reiterating its opposition to Prop. 29 but calling for a new cigarette tax dedicated just to the budget:

“We urged voters to cast ballots against Proposition 29 because at a time when the state cannot afford to fulfill its most basic responsibilities, the initiative would have put most of the new revenue — more than $500 million a year — toward an entirely new agency and a new state function: the funding of disease research that already is relatively well funded by the federal government….

“But our objections to the specifics of Proposition 29 do not mean that we don’t support a new cigarette tax. We do….

“As Proposition 29 would do, part of the money should go toward smoking prevention programs, as well as for smoking cessation treatments. The rest could productively be spent on treatment for smoking-related diseases, so the people who pay the tax receive the direct benefit and the state budget gets some relief.” 

The value of Establishment support or opposition, especially a Times editorial, is worth an unknowable exact amount, but probably many tens of millions of dollars. So expect a new initiative, as the Times suggested, on the November 2014 ballot along the lines indicated. It might raise taxes $1 a pack to fund lung cancer and other smoking-related treatments, relieving the general fund of spending on such treatments through Medi-Cal.

California Budget Project

Another major Lucky Strike against Prop. 29 was a study by the influential liberal think tank, the California Budget Project. Its longtime executive director, Jean Ross, recently became the head of the Ford Foundation, a pillar of the Eastern Establishment. Usually the CBP looks favorably on tax increases. But a May Budget Brief found, in particular, that Prop. 29 would slam poor people:

“Increasing the cigarette tax would have a disproportionate impact on low-income Californians because they spend a larger share of their incomes on tobacco products. National data show that in 2009, individuals with incomes in the bottom fifth of the distribution spent an average of 0.9 percent of their incomes on cigarette taxes, compared to an average of less than 0.1 percent for those in the top 1 percent. In part, this disparity stems from the fact that the cost of a single pack of cigarettes makes up a larger share of the incomes of low-income individuals.

“It also reflects the fact that low-income individuals are more likely than others to smoke. In 2008, for example, nearly 20 percent of California adults with household incomes of $20,000 or less were smokers, compared to fewer than 10 percent of those with household incomes of more than $100,000 (Figure 4).”

The implication is clear: Poor people will have less money because of the cigarette tax. They then will have to depend more on state services. Which will put even more pressure on the general-fund budget. The state’s deficit will get even worse.

The Budget Project looked at the big budget picture:

“Programs funded by Proposition 29 would be “locked in,’’ limiting the ability of the Legislature to modify spending in response to economic, budget, and demographic changes or other health-related research needs that may emerge in the future. In addition, these revenues would not be available to support other programs or to help close future budget gaps. 

“Finally, to the extent that voters approve new revenues for a specific purpose through an initiative, such as Proposition 29, lawmakers or voters may feel less inclined to subsequently approve additional revenues regardless of the purpose.”

That’s a key concept. The Establishment’s push now is for Gov. Jerry Brown’s $8.5 billion tax increase on the November ballot. Had Prop. 29 passed, voters might consider that they already had performed their socialist duty for 2012 in June, and didn’t need to do so again in November.

Black market

There’s also strong evidence that a hefty tax increase, such as Prop. 29’s $1 a pack, would make much worse already worrisome black market activity. When New York was boosting smoke taxes a couple of years back, the Huffington Post reported:

“NEW YORK — The big cigarette tax increases that many states are instituting to balance their out-of-whack budgets are raising fears that the trend will make black-market smokes more profitable and lead to more cigarette smuggling.

“Cigarette smuggling has been going on for generations and already costs states untold billions in lost tax revenue.

“Criminal gangs stock up in low-tax states like Virginia and Missouri, truck the cigarettes north and illegally resell them in high-tax states like Michigan and New Jersey. Other buy cartons and cartons of tax-free smokes on Indian reservations and sell them elsewhere. Buyers order untaxed cartons of murky origin on the Internet. And ships arrive from China carrying cargo containers filled with counterfeit cigarettes.

“Law enforcement officials and others worry that the widening price spread between taxed and untaxed cigarettes will only make the situation worse.”

California is too far from Virginia and other states in the Tobacco Belt to worry much about smuggling from there. But there are many local Indian reservations with low-tax cigs. And our Los Angeles, Long Beach, San Diego and San Francisco ports are among the largest in the world, daily unloading billions of dollars of goods.

Those born in America generally don’t have much of a taste for foreign cig brands. But they might acquire such a taste if the price of U.S.-made smokes is high. And California, of course, has a large immigrant population, whose smokers picked up the habit puffing brands from other lands.

For now, at least, a new cigarette tax has been defeated. But the demise of Prop. 29 clears the ash tray for the big push for Brown’s tax increase in November.

 

26 comments

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  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 25 June, 2012, 19:31

    Actually, what really defeated the measure was the state’s political Establishment, led by the Los Angeles Times and the California Budget Project. The Establishment realized that jacking up cig taxes $1 a pack to raise $735 million a year and give it to an new unaccountable cancer research bureaucracy only would worsen the state’s fiscal mess.

    Ding ding ding-we have a winner, chicken dinner!

    29 lost because it was a scam to send bilions in taxes into a black hole to do absoltely nothing, simply no other reason.

    Reply this comment
  2. Donkey
    Donkey 25 June, 2012, 19:47

    THe RAGWUS is just butt hurt because they didn’t get another unaccountable bureaucray to play with behind closed doors.

    I have been asked many times “what is a RAGWUS or What does RAGWUS mean?” Here is how I see it:
    awful, detestable, abhorrent, atrocious, bad, base, beastly, contemptible, cursed, despicable, disgusting, foul, grim, grody, gross*, hairy*, hateful, heinous, hellish, horrible, horrid, loathsome, lousy, nauseating, obnoxious, odious, offensive, repellent, reprehensible, repugnant, repulsive, revolting, rotten, sleazy*, stinking, terrible, vile, wretched, and those are the good parts. 🙂

    Reply this comment
  3. Donkey
    Donkey 25 June, 2012, 19:48

    Go Rex Go!!!
    🙂 🙂 🙂 🙂 🙂

    Reply this comment
  4. Rex the Wonder Dog!
    Rex the Wonder Dog! 25 June, 2012, 19:56

    I have been asked many times “what is a RAGWUS or What does RAGWUS mean?” Here is how I see it:
    awful, detestable, abhorrent, atrocious, bad, base, beastly, contemptible, cursed, despicable, disgusting, foul, grim, grody, gross*, hairy*, hateful, heinous, hellish, horrible, horrid, loathsome, lousy, nauseating, obnoxious, odious, offensive, repellent, reprehensible, repugnant, repulsive, revolting, rotten, sleazy*, stinking, terrible, vile, wretched, and those are the good parts.

    Donk-how much time do you think Fatty Rizzo will do in the joint?

    Reply this comment
  5. Donkey
    Donkey 25 June, 2012, 20:15

    I don’t know Rex, but you know the RAGWUS protects its own. And what is more disturbing to me is the fact that Chief Adams was in that city scam up to his neck, along with all his officers, and he is not being prosecuted at all!! The LE RAGWUS of Bell was the muscle for Rizzo and kept the fear going to the few citizens of Bell!! 😉

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 25 June, 2012, 21:16

    Adams is buddies with LA DA Cooley, they protect those in their club.

    Reply this comment
  7. Acapitalistpig
    Acapitalistpig 25 June, 2012, 22:35

    This cigarette tax failed because people are sick and tired of the incessant encroachment on individual liberties by the state. I’ve never smoked and don’t plan to, but voted against this ridiculous law. Remember, today it’s cigarette smokers who are targeted, tomorrow it’ll be you Twinkie eating bloggers…..

    Reply this comment
  8. Bill Hough
    Bill Hough 26 June, 2012, 15:02

    There’s a warning in the article, “So expect a new initiative, as the Times suggested, on the November 2014 ballot along the lines indicated. It might raise taxes $1 a pack to fund lung cancer and other smoking-related treatments, relieving the general fund of spending on such treatments through Medi-Cal.”

    Whenever a tax increase goes down, the taxers just tweak it and put it back on the ballot and eventually it passes. People in this state have to wise up and keep voting “no” on all tax increases, period.

    Reply this comment
  9. NorCal Libertarian
    NorCal Libertarian 26 June, 2012, 17:17

    I’m no longer a smoker (quit 20 pounds ago) nor do I own any stock in the big tobacco companies nor am I a “big business”. I’m just another over-taxed payer who voted “NO” on this simply because the 98 District-electeds in Sacramento have proved time and time again, that they do not use money where it’s supposed to be used and they keep sticking their hands in others’ cookie jars! I agree that continued research is needed as one way to fight cancer (since it’s not all smoking-related). However comma I prefer to donate DIRECTLY to a cause than to Sacramento and HOPE that they put the money where they say it is supposed to go.
    It’s almost like that NRA ad where Wayne LaPierre says “Send us your letters and we’ll forward them on to Washington for you!”. Well Wayne…and all you others out there who use a similar message (no matter what the cause), I can afford 44-cents to mail my own letters directly.
    Thank you…..
    I’m an American and I approved this message!

    Reply this comment
  10. Ted Steele, The Decider
    Ted Steele, The Decider 26 June, 2012, 19:18

    LOL— The folks who run this website hate the President so much they just HAVE to run a picture of him smoking! If they had a picture of the devil or Hitler smoking a fag they wouldn’t have run that! LOL

    Dull-normal-predictable lads.

    Reply this comment
  11. Rex the Wonder Dog!
    Rex the Wonder Dog! 26 June, 2012, 21:41

    “…smoking a fag …”

    Teddy, I KNOW you need help lil buddy 😉

    Reply this comment
  12. Rex the Wonder Dog!
    Rex the Wonder Dog! 26 June, 2012, 21:44

    Whenever a tax increase goes down, the taxers just tweak it and put it back on the ballot and eventually it passes.

    Not true, these pension sales taxes Clown has proposed are the same ones Arnold tried to pass, and failed, and it WILL fail for Clown too-don’t ever count your chickens before they hatch.

    Reply this comment
  13. Fred Mangels
    Fred Mangels 27 June, 2012, 06:22

    At least some of you seem to be gloating over Prop 29 losing and make it sound like it was on overwhelming win for those of us who opposed it. I should point out that essentially half the people in the state supported the tax. If the election was held a day earlier or later Prop 29 might well have won. This is a shallow, and possibly temporary, victory.

    Reply this comment
  14. Rex the Wonder Dog!
    Rex the Wonder Dog! 27 June, 2012, 07:15

    I should point out that essentially half the people in the state supported the tax. If the election was held a day earlier or later Prop 29 might well have won. This is a shallow, and possibly temporary, victory.

    It LOST Fred, and it doesn’t matter if it was by a 50.00000000000000001 margin or 99.99999999999999999 margin-IT LOST, just like Arnold’s 1A-1G tax hikes LOST, just like Clowns pensions sales tax will lose November 6. Stop the whine and get on board the revolution.

    Reply this comment
  15. Fred Mangels
    Fred Mangels 27 June, 2012, 07:33

    Oh yes it does matter, especially when folks like you consider it proof the Governor’s tax proposals will lose in November. They might well lose since many Californian’s won’t vote to tax themselves, but the Prop 29 “victory” in no way shows an overwhelming anti- tax attitude in the state.

    If Prop 29 had lost by 60% or more, than I’d say you’d be justified in gloating. I wouldn’t get complacent about this.

    Reply this comment
  16. Ted Steele, The Decider
    Ted Steele, The Decider 27 June, 2012, 09:10

    Fred— Go to the head of the class !!

    Reply this comment
  17. Fred Mangels
    Fred Mangels 27 June, 2012, 10:03

    Thanx, Ted, but just to be clear, I was RABIDLY opposed to Prop 29, and it’s not over yet. Those folks never sleep.

    Reply this comment
  18. Ted Steele, The Decider
    Ted Steele, The Decider 27 June, 2012, 10:27

    “Rabid”?

    Hope you’re ok now !

    Reply this comment
  19. Fred Mangels
    Fred Mangels 27 June, 2012, 10:44

    Well, kinda, but I have little sense of relief in such a narrow defeat of Prop 29. I’m not sure I feel we won anything.

    Reply this comment
  20. Rex the Wonder Dog!
    Rex the Wonder Dog! 27 June, 2012, 15:40

    Prop 29 got SPANKED Fred!!!!!!!!!!!!!!!

    Just like the 11-6-12 taxes will.

    Just like Teddty was last night by his boyfiend 😉

    Reply this comment
  21. Ted Steele, The Decider
    Ted Steele, The Decider 27 June, 2012, 16:37

    Rex– here you are on a major serious Calif. polit. blog making homophobic disparaging remarks. You can do better, can’t you? Or is this sort of thing ok out here? What do you think little buddy?

    Reply this comment
  22. Rex the Wonder Dog!
    Rex the Wonder Dog! 27 June, 2012, 20:50

    “homophobic disparaging remarks”??????????????

    All i said was your BF spanked you last night, what are you so DEFENSIVE Teddy? Was that a little too close to home?

    Reply this comment
  23. Rex the Wonder Dog!
    Rex the Wonder Dog! 27 June, 2012, 20:51

    Im all for gay marriage teddy. I fully support you lil buddy 😉

    Reply this comment
  24. Queeg
    Queeg 27 June, 2012, 22:18

    Give Teddy some respect. He says litle but it’s powerful!

    Reply this comment
  25. Rex the Wonder Dog!
    Rex the Wonder Dog! 27 June, 2012, 22:59

    🙂

    Reply this comment
  26. Ted Steele, The Decider
    Ted Steele, The Decider 28 June, 2012, 08:59

    Poor Poodle boy—- oh—– I bet he hates Justice Roberts this morning….LOL…..ooooooooooouch—- saw it coming though——ICC—- Ya gotta love it——just a peppercorn as they used to say in con law class !

    Reply this comment

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