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Tuesday, May 12, 2009

On Vice Taxes

It appears that the current Democratic-led Congress can't tax people enough for their vices. The cigarette tax went up to pay for the ex-low income children protection, now middle class handout health program known as SCHIP. Now, it appears that soda will be taxed to raise funds for the government's very unfair entry into the health insurance market. There is quite the uproar over the Feds passing vice taxes, some of which are class warfare (Dems taxing poor people who smoke), some of which are on moral grounds. I have issues with federal vice taxes, though I don't necessarily believe they are inherently bad things.

The idea of federal vice taxes in America go back to its founding. The Whiskey Rebellion of 1797 was over a tax passed by Congress on distilleries. In an early version of corporatism and cartel creation, the tax was designed so that big businesses could take advantage of a flat fee while the smaller businesses had to pay per gallon no matter what. This set off a insurrection in which President Washington used the federal military to subdue a citizen's revolt. It's rumored that when Washington was asked about the immorality of the tax, as some said it was, he responded by saying that the rebels voted in the representatives that passed the tax, and said they had to get over it until they could vote them out, though I am paraphrasing.

While I agree with Washington's rumored words on the way government works, I believe federal vice taxes are both inefficient and a slight, albeit legal slight, against federalism. Vices taxes are a tariff on products or services deemed immoral or outside the realm of individual moderation, and the hope of the tax (so it is said) is to discourage the use of the product or service. While not every vice tax is actually made to prevent action, some are a very simple way to suck more income from the already over-taxed American public, the very idea of taxing something that is socially unacceptable puts the tax itself in the realm of the state or federal powers question.

As a staunch federalist, I believe that any social question that isn't already answered by the constitution (like the ability for blacks to reap the rewards of being American citizens) should be answered by the individual states. Social policy is not part of the responsibilities of the federal government. We've seen quite clearly what exactly the federal government does when it finds a breach in federalism's wall: it invades, Roe v. Wade being the most famous of federal usurpations of a state's power to regulate the social sphere. In my own lovely Utah, the question of alcohol and alcohol consumption are state matters, amongst other things like gay marriage, drug enforcement, morality laws and so forth. I don't necessarily agree with every social law Utah's legislature passes or laws Utahns vote for through propositions, I can always sigh a sigh of relief that the federal government has little say in any of it.

The federal government shouldn't be in the business of regulating the social sphere. The reason we have states in the first place is for self-rule. If our vices are to become an ever increasing interest to the federal government, we really don't have any other refuge to escape the iron fist of Congressional micromanagement.

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