SCHIP and Taxes

SCHIP AND TAXES….By the way, since I wrote about the SCHIP expansion earlier in the day, I might as well take this opportunity to mention that I think raising cigarette taxes is a crappy funding vehicle for it. There are two pathologies at work here. First, PAYGO, which Democrats reinstated after they returned to power this year, requires that any new spending be matched with a revenue source. This typically means a tax increase, which means that every little spending increase has to be matched with some equally little tax increase. The result is an enormous hodgepodge of little tax increases that bear no relationship to a sensible tax system. (Not that we have a sensible tax system now, mind you, but this makes it even worse.)

Second, because Republicans have made general tax increases taboo, the only way to get any kind of remotely bipartisan support for a tax bill is to restrict it to weird, out-of-the-way taxes: sin taxes, excise taxes, various “user fees,” and so forth. This makes no sense either, and results in both more hodgepodgey-ness and a tax burden that (often) ends up becoming more and more regressive.

Anyway, the whole thing is a mess. If Congress really thinks we need higher cigarette taxes, I don’t really have a problem with that. But picking it out of a hat to fund children’s healthcare because we can’t get the votes for something more sensible — well, that’s just dumb. Blecch.