Taxes on cigarettes and liquor hit poor people harder than the rich, but the 'voluntary tax' of state lotteries hits them hardest of all.
A government needs revenues. So what does it do? It taxes the poor. That happens too often, says Michael Davis, a senior fellow at the National Center for Policy Analysis (NCPA) in Dallas. "It's politically expedient."
The poor don't vote in elections to the degree the middle class and the rich do. Nor do they often contribute to political campaign funds. They don't have much money left over for that after paying for housing, food, and clothing.
And the poor squawk less over tax hikes.
One frequent way the poor get hit is additional "sin taxes" – taxes placed on gambling, tobacco, and alcoholic beverages. Because the poor tend to consume more of these items per capita than do those who are better off, poorer people bear a disproportionate share of that tax burden.
State legislators can and do argue that taxing cigarettes and liquor discourages these often-harmful habits. And, they may add, expanding state-sponsored lotteries or other gambling can provide revenues for positive government activities, such as education.
At the federal level, Sen. Gordon Smith (R) of Oregon is proposing legislation to expand spending for the State Children's Health Insurance Program, which provides insurance for children from poor (and some not-so-poor) families. He'd finance it by boosting the federal excise tax on cigarettes.
Critics say sin taxes are a poor way to boost revenues.
For instance, Senator Smith's proposed hike in federal cigarette taxes – from 39 cents to $1 a pack – would transfer wealth from smokers to non-smokers, says Patrick Fleenor, chief economist of the conservative Tax Foundation. And since the poor are more likely to smoke, the tax would fall most heavily on them.