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Derek Thompson

Derek Thompson - Derek Thompson is a senior editor at The Atlantic, where he oversees business coverage for the website.
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He is a visiting research fellow at the Committee for a Responsible Federal Budget at the New America Foundation. Derek has also written for Slate, BusinessWeek, and the Daily Beast. He has appeared as a guest on radio and television networks, including NPR, the BBC, CNBC, and MSNBC.

The Case Against the Case Against Sin Taxes

By Derek Thompson
Oct 6 2009, 9:45 AM ET Comment

Being a libertarian I think is something like being a Wes Anderson fan. For some people, it's a phase. For others, it's a lifestyle.

For me, both were phases, but during my libertarian days, one of my favorite writers about science and public policy was William Saletan at Slate. Now I've been quietly supporting the inclusion of sin taxes in our health care bill to help extend subsidies to poorer Americans and patch up our deficit, or (if the tax collects little because it proves discouraging) keeps our mouths away from corn syrup and lard. But Saletan seems to disagree. He writes



When taxes on cigarettes were first proposed, the revenue was supposed to be used to help smokers quit and to prevent others from starting. But it didn't take politicians long to siphon the money away for other purposes. Now state governments count on cigarette revenue to help fund their budgets. We've all become nicotine-dependent.

Ha! That's a great line. But it's not a great critique of the cigarette tax, which strikes me as just about the least objectionable sales tax in the world. Also, have you seen state budgets these days? They're nightmarish. "Unprecedented." If anybody needs a cigarette tax (and a cigarette) these days, it's the National Governors Association. This seems like the weird time to go Galt on their sin taxes. Saletan goes on:

Marijuana advocates are trying to repeat this trick. The quickest way to a politician's heart is to dangle money. So the pot lobby is telling lawmakers in cash-starved California exactly how much revenue they can collect by legalizing and taxing marijuana. It's a truth older than democracy: To secure the government's support, just cut the tax man in on the action.

I guess I'm confused. William Saletan tends to lean libertarian on tax issues, but he also tends to lean libertarian on drug issues too. Why wouldn't a marijuana tax be a sensible compromise -- it legalizes a drug with little reason to remain illegal while making the California government some much needed dough. He goes to say that pot is being overtaken

by a savvier mainstream competitor: the campaign to tax soda. Like the tobacco-tax movement, the soda-tax movement began with a rationale of preventing and curing addiction. And like the tobacco-tax movement, it's evolving into a revenue addiction.

Will, you say "revenue addiction" like its a bad thing! If anything the problem both our states and our federal government face is revenue withdrawal. I might call Republicans "addicted" a long list of things, but "more revenue" would fall somewhere between "cashmere berets" and "Barbra Streisand tribute concerts." And plenty of moderate Democrats ride in the same boat when it comes to tax increases, even if they're scheduled for years after the recession ends.

So I guess I don't understand something very simple. There is no debate about whether we'll eventually need new taxes to fill our state coffers and pay down our deficit. So out of all the taxes in the world, why would we particularly object to the ones that, at worst, nudge us toward smoking slightly fewer cigarettes, toking slightly more pot, drinking slightly less coke, and paying for health care reform in the process?

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