Joe Carter has been examining "sin taxes." Joe believes that as a method of curbing immoral behavior these types of taxes are, at best, ineffective. However he does suggest a method that could be used to cover the social costs of vices:
Insurance companies already use actuarial statistics to determine the premiums paid by smokers, so there should be no reason why a similar method could not be used to determine the taxes. The state could calculate the total cost of the activity (i.e., Medicare payments, loss of income tax from early death, etc.) divide it by the quantity of the product consumed (i.e., packs per day smoked) and amortize it over the life expectancy of the average smoker. The resulting amount would be added to the price of each pack as the equitable tax on the product. The money could then be set aside in a special fund which would be used to reimburse the state for incurring these expenses.
This is an interesting idea. However I believe there is a major flaw in this idea. If there's one thing Social Security should have taught us, it's that special purpose funds will never be safe from Congressional grabs. If we set aside a special fund from vice taxes to cover the costs of those vices, I guarantee the money would be diverted for other purposes within a few years.
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