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saelliso · 03-07-2002, 01:18 AM

In respons to silverteioh's comments:

I agree that taxing people that are addicted to something make sense. Taxing anything with inelastic demand will bring in revenue regardless of the size of the tax. Unfortunately there is no nice way to say that your "thinking about the big picture" argument is wrong.

In the macro sense you are right in saying that the cd industry is a hell of a lot more important to the world's economy than the tobacco industry is to Indiana. But, I wasn't talking about the world's economy. If you would like me to, I can some other time though.

Looking at the BIG PICTURE, the entire state of indiana is in actuality harming itself becuase of the tobacco tax. Not only does the industry suffer and the trickle down effect takes place, but a tobacco tax is the most regressive tax on the law books to date.

The latest numbers on the demographics of smokers show that it is the bottom third of income earners who make up the majority of smokers. Meaning that it is the people with the least amount of money who are being taxed. While yes they will pay the increased tax for as long as they can, but at a certain point items like food and shelter become more important to them then buying cigarettes. In other words, they will begin to forgo their smoking habit to preserve their quality of life. This will cause the loss of sales for the tobacco industry.

Now getting back to why you are wrong . .
Think about it. The tax on tobacco will ultimately cause the loss of income and jobs as businesses that are both directly and indirectly related suffer from loss of income. While cigarettes are an inelastic product, because of the reason mentioned previously and the fact that not everyone is hooked, sales will fall and all residents of Indiana will be hurt.

On the other hand going back to your example, yes the music industry is possibly somewhat hurt by napster and sites like that. But you have to look at the big picture. Suppose the music industry was somewhat damaged by file-sharing, and possibly some jobs were lost in the music industry. Where those jobs are lost others are gained by the dot-coms who promote file sharing. So this does not harm the economy because it is simply structural unemployment and where one industry loses jobs another gains them.

By the way, Happy Birthday Orgazmo!

03-07-2002, 01:18 AM	#6 (permalink)
saelliso Junior Member Join Date: Feb 2002 Posts: 5 Internets: 10	In respons to silverteioh's comments: I agree that taxing people that are addicted to something make sense. Taxing anything with inelastic demand will bring in revenue regardless of the size of the tax. Unfortunately there is no nice way to say that your "thinking about the big picture" argument is wrong. In the macro sense you are right in saying that the cd industry is a hell of a lot more important to the world's economy than the tobacco industry is to Indiana. But, I wasn't talking about the world's economy. If you would like me to, I can some other time though. Looking at the BIG PICTURE, the entire state of indiana is in actuality harming itself becuase of the tobacco tax. Not only does the industry suffer and the trickle down effect takes place, but a tobacco tax is the most regressive tax on the law books to date. The latest numbers on the demographics of smokers show that it is the bottom third of income earners who make up the majority of smokers. Meaning that it is the people with the least amount of money who are being taxed. While yes they will pay the increased tax for as long as they can, but at a certain point items like food and shelter become more important to them then buying cigarettes. In other words, they will begin to forgo their smoking habit to preserve their quality of life. This will cause the loss of sales for the tobacco industry. Now getting back to why you are wrong . . Think about it. The tax on tobacco will ultimately cause the loss of income and jobs as businesses that are both directly and indirectly related suffer from loss of income. While cigarettes are an inelastic product, because of the reason mentioned previously and the fact that not everyone is hooked, sales will fall and all residents of Indiana will be hurt. On the other hand going back to your example, yes the music industry is possibly somewhat hurt by napster and sites like that. But you have to look at the big picture. Suppose the music industry was somewhat damaged by file-sharing, and possibly some jobs were lost in the music industry. Where those jobs are lost others are gained by the dot-coms who promote file sharing. So this does not harm the economy because it is simply structural unemployment and where one industry loses jobs another gains them. By the way, Happy Birthday Orgazmo!