Day by Day Cartoon by Chris Muir

Monday, July 16, 2012

Static and dynamic tax behavior - the disconnect

So Liberals believe that smoking is bad, therefore to reduce teenagers from smoking, the Dims believe that you need to make the price of a box of cigarettes very expensive as a barrier to prevent kids from smoking. It's also consistent with their nanny state belief that since smoking is bad, taxing smokers is OK. Since smokers are addicted, we can extract more money from them. However, since smokers generate so much in taxes, the Dims don't have the stones to ban it outright. 

Case in point, there is a proposed ballot initiative on the June ballot to add an addition $1 per pack tax on each box of cigarettes to pay for some pie in the sky program. It is estimated that this tax will generate $735 million dollars in revenue. So, in California, approximately 735,000,000 packs of cigarettes are sold per year.

So to change/modify behavior regarding smoking, raising tax discourages consumption.

But with regards to income, these same Libs want to "tax the rich". They assume, if you increase the tax rate by 10%, there will be an additional 10% collected. 

Um, WRONG!!!

The Libs assume a change in behavior regarding smoking because of the increased taxes, but assume a static behavior regarding income tax rate increase.

Don't they realize the logic failure?

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