Sunday, September 30, 2007

Interalizing the Cost of Seconhand Smoke.

In a recent article posted on fox news, democrats have chosen to implement a 156 percent increase in the federal cigarette tax, raising the tax from 39 cents a pack to $1 dollar a pack. Some argue that such a tax increase only affects low-income people, because low-income people are more likely to smoke. But I think otherwise. This tax increase is another way of dealing with the everyday frustration that is air pollution. Air pollution caused by the millions of people in America and in this case the thousands in Colorado that pollute the air with their cigarette smoke.

The 156% tax increase is nothing more than an excise tax. For many, many years nonsmokers have been forced to sit, stand, eat dinner or in Colorado walk the streets dealing with secondhand smoke. Second hand smoke is nothing more than a negative externality (A consequence of an economic activity that is experienced by unrelated third parties) produced by smokers.

So what does a 156% tax increase have to do with secondhand smoke and nonsmokers? The tax allows smokers, low-income and smokers of a higher income, to internalize the cost of their air pollution, otherwise known as secondhand smoke. The $1 per pack tax is a shift towards efficiency. Because of the tax, the social cost of second hand smoke is moving steps closer to equaling the private cost of smoking. Efficiency!

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