House Democrats’ tobacco tax hike could violate Biden’s pledge

House Democrats' tobacco tax hike could violate Biden's pledge

House Democrats have proposed increased taxes on tobacco and nicotine products to help their $ 3.5 trillion spending plan.

According to the summary of the plan, the measure could increase existing tariffs on cigarettes, cigars and hand-rolling and smokeless tobacco. He also proposed new taxes on vaping products.

Businesses typically pass so-called excise taxes – duties on specific products such as alcohol, gasoline, soda and tobacco – to customers with higher prices.

These tax increases could bring in more than $ 96 billion in revenue over the next decade, according to estimates by the Non-partisan Joint Committee on Taxation.

While health advocates applaud the plan, opponents say it violates President Joe Biden’s promise to raise taxes on Americans to as much as $ 400,000 a year.

“The tobacco tax is probably the most regressive tax,” said Ulrich Boesen, senior policy analyst for excise taxes at the Tax Foundation. “There is no question that this is a tax on people earning less than $ 400,000.”

The White House did not immediately respond to CNBC’s request for comment.

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According to the Centers for Disease Control and Prevention, Americans living below the poverty line have higher smoking rates than the general population. These people can smoke for twice as many years as those with three times that income level.

Boesen estimates that one of the proposals to double the cigarette tax could cost a person an additional $ 400 a year, depending on where they live, by smoking a pack of cigarettes a day.

However, the proposed tax increase could pose more problems, as Bosen detailed in a Tax Foundation analysis.

“We’re talking about $ 100 billion from a very narrow segment of the market – just nicotine tobacco products,” he said. “It is risky to rely on this income for a long time because there are fewer and fewer smokers every year.

According to a study, the Food and Drug Administration has proposed a ban on menthol cigarettes, suggesting that it could cause 923,000 American smokers to quit.

Boesen said the FDA was also reviewing authorizations for vaping products and had rejected more than 90% of the applications.

“A significant portion of this market is at risk,” he said. “And then obviously [tax] Income is threatened.

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