Curmudgeon's Corner

Wisconsin: Progressive or Regressive Taxation?

Posted by Al Campbell on April 2, 2009

Quality of Life, Taxes, U.S., Wisconsin

Wisconsin has had the reputation, deserved or not, of being a "progressive" state so far as taxation.  The generally understood definition of progressive taxation is that those who earn more are taxed more.  Conversely, regressive taxation suggests that the less one earns, the more one pays.

Is Wisconsin really a progressive tax state?

The tax on cigarettes would suggest just the opposite.  Studies have tended to indicate that there are more smokers in the ranks of those with lower incomes.

If that is the case, those who earn less are really getting smacked from this point forward.  Wisconsin is taxing each pack of cigarettes at the rate of $2.52 per pack.  Add to that the new federal rate of $1.01 per pack, and it becomes obvious that the price of smoking has gone skyward.

Those who want smoking abolished are no doubt happy about this upward movement of taxes on a bad habit.  Those who legislate profess that they, too, are happy when the number of smokers declines because that takes strain from the state's health care system and generally results in more productive people.

The problem with all the legislative puffing is simple.  As people finally get to the point of ending their smoking habit due to the ever-increasing costs involved, they cease paying the tax.  When the tax revenue drops, the state suddenly realizes that the programs being operated on the backs of smokers are now underfunded.  Since government programs never end once begun, the legislators now are forced to find other revenue to keep the programs going, and we are taxed yet again in other areas.

The long and short is that we pay too much in taxes because there are too many government uses for our money.  We tend to lose sight of the impact of smoking taxes if we are not smokers, and the majority are not smokers.  We do not stop to think that the higher taxation rates are actually designed, whether intentionally or unintentionally, to kill the goose that lays those golden eggs.  As the eggs cease to be produced, taxes on non-smokers increase but there is a certain subterfuge involved that camouflages that fact.

Oppressive taxes create black markets and tax cheats.  The real folly is that tobacco continues to be subsidized since it is so valuable on the tax side of the ledger.  It will be most interesting to see what the Federal Drug Administration does now that it has been tasked with regulating tobacco as if it were a drug.

I am not a cigarette smoker although I was until July 5, 1985 when I stopped for good on my XXth try.  I do enjoy cigars, but that use for tobacco is under heavy challenge, as well.  I'll have to find another "bad" habit at this rate...not that I don't have enough of those already.