Look at all these glamorous people eating canapés and drinking champagne in their seersucker suits and sundresses! Oh, no—is that what I think it is? RUN!

If you think it’s not a great idea to fund educational programs via cigarette taxes, you can start to feel like a skunk at a garden party.

Here in the great state of Missouri, on November 8 we will vote on a constitutional amendment that would establish a 60-cent tax per pack of cigarettes to create a fund for pre-K education. Backers believe that it would generate as much at $300 million per year, which would pay for tens of thousands of Missouri children to attend pre-K. They have an impressive advertising campaign and a strong social media presence highlighting the bipartisan support they have assembled for their plan.

On one level, I am sympathetic to their cause. I understand that there are perfectly defensible reasons to support raising cigarette taxes. Smoking is terrible, and we want fewer people to do it. Raising taxes will deter them. If we can provide pre-K with the funds such a tax generates, we’re killing two birds with one stone.

But there is more to this plan than meets the eye.

The largest financial backers of the amendment campaign have been big tobacco companies. Why, you might ask, is an industry looking to increase taxes on itself? Well, paired with the 60-cent tax on all packs of cigarettes is a 67-cent surcharge on so-called “wholesale” cigarettes—cigarettes produced by “small tobacco” companies not party to the landmark tobacco settlement that required the big tobacco companies to pay states in exchange for protection against future lawsuits. Big tobacco pays right around 67 cents per pack into these funds, giving small tobacco an edge in the marketplace. This amendment would eliminate that advantage.

What’s more, many anti-smoking and cancer-fighting groups have decided to oppose the amendment. They argue that a 60-cent tax is not substantial enough to deter folks from smoking.

For those of you keeping score at home: We have a cigarette tax campaign that is funded by big tobacco companies and opposed by the American Cancer Society. If I’m a skunk at the garden party, at least I’m in good company.

Setting the parlor intrigue aside, it’s hard for me to not think that for many Missourians, the real draw here is getting something for nothing. I don’t smoke, so I would never pay this tax. Most Missourians, particularly educated and wealthy ones, don’t either, so they won’t have to pay. If the state generates enough funds, there is good reason to believe that many middle-class children of nonsmokers will get pre-K without their parents having to pay a dime.

If we think one step further though, we see the problem. Cigarette taxes are about the most regressive tax we could possibly institute. Poor people pay the brunt of them. If this tax was going to be passed in 1950, when nearly half the population smoked, it would be spread more evenly across the populace. But it is 2016, and only a specific subset of Missourians smoke. What’s worse, a lot of those people are addicted to cigarettes, and we are preying on that addiction to fund something that we want.

Look at what happened in Arkansas, which instituted a lottery in 2008 to provide scholarships for students to attend college in the state. Like cigarettes, lottery tickets are disproportionately purchased by poor people. In Arkansas, scholarship recipients are disproportionately middle- and upper-income, making the scholarship lottery a pretty clear upward transfer of wealth. Sure, it sounded great at the outset, as non—lottery ticket buying parents eyed scholarships for their kids, but on the backs of the poor? It just feels unseemly.

There are reasons to support providing scholarships to pre-K to students in the state, but the how matters. How we fund those services, how we determine who is eligible, and how we pay for them is critically important. These considerations can get lost in big promises to people with little skin in the game.

The post A Skunk at the Pre-K Garden Party for Cigarette Taxes appeared first on Show-Me Institute.

While growing up in the small border town of Atchison,
Kan., my father, uncles, and family friends made frequent trips
over the Amelia Earhart Bridge to a small convenience store in
Buchanan County, Mo. They usually returned with a full gas
tank and small quantities of alcohol or cigarettes. I was too
young to understand what prompted these excursions. Now I
know. My father and others took advantage of Missouri’s low
excise tax rates on gas, alcohol, and cigarettes. As these trips
continued, sales and tax revenue were redistributed from Kansas
to Missouri. While the convenience store in Missouri remained
busy, the Shell station near the bridge in Atchison was often
empty.

Missouri benefited at Kansas’ expense as a direct result
of maintaining a lower tax rate in a competitive marketplace. In
2009, the QuikTrip on Southwest Blvd. in Kansas City, Kan.,
moved its location 100 feet into Missouri to take advantage of
the lower excise taxes. However, the situation that prompted this
move may be about to change.

Last fall, the Missouri Secretary of State gave approval to
a coalition of Missourians, led by the American Cancer Society,
to circulate a petition proposing an increase in the cigarette tax
from 17 cents to 90 cents per pack, a whopping 429 percent
increase. If passed, this proposal will stop the heavy cross-over
traffic of people coming to Missouri from other states to buy
cigarettes at a bargain price. In fact, business likely will shift in
the opposite direction – out of Missouri into other states.
Kansas’s 79-cent cigarette tax would certainly serve as an
appealing alternative to Missouri’s potential 90-cent tax. Under
the proposed increase, those who purchase cigarettes in Missouri
would pay $2.20 more per carton than they would if they
purchase cigarettes in Kansas.

While raising excise taxes might appear to be a simple way to
increase revenue, it can backfire and may even cause a loss in net
cigarette sales. Missouri’s two largest metropolitan areas, Saint Louis
and Kansas City, border states with much higher cigarette taxes,
prompting residents of neighboring Illinois and Kansas to make their
purchases here. Missouri’s 17-cent tax is certainly attractive to residents
of Illinois, where the tax rate is 98 cents, and Kansas, where the rate is
79 cents. Missouri benefits when residents of other states who come to
Missouri for work, sporting events, etc., voluntarily make such purchases
here.

Missouri Attorney General Chris Koster, a proponent of raising
Missouri’s cigarette tax, claimed in the Kansas City Star that a fivefold
increase in the state’s cigarette tax would lift revenue by a commensurate
amount – from $90 million a year to close to $500 million. But Koster’s
figures do not account for the major decrease in sales likely to occur
should the tax hike become a reality. It is silly to think that cigarette
sales will remain the same if Missouri smokers are required to spend
$14.60 more per carton of cigarettes. Remember, when you tax
something, sales will decrease. Increasing a cigarette tax might result in
less smoking, but it will also drive down purchases of cigarettes.

Patrick Fleenor, former senior economist at the Tax Foundation,
provides a telling example: When Michigan increased its cigarette tax
rate from $2.50 to $7.50 per carton (25 cents to 75 cents per pack), sales
decreased 26.7 percent. During the same period, cigarette sales greatly
increased in Indiana and other neighboring states with lower cigarette tax
rates. Should Missouri follow in the footsteps of Michigan, convenience
stores in Atchison, Kan., are likely to become much more profitable and
Missouri will experience a loss of cigarette revenue because fewer
cigarette will be sold on the eastern side of the border.

Amy Lutz is an intern at the Show-Me Institute, which promotes market
solutions for Missouri public policy.

The post Why a Whopping Increase in Missouri’s Cigarette Tax Is a Bad Idea appeared first on Show-Me Institute.

A gas station and liquor store were located just across the border on the other side of the bridge; their parking lots rarely had an open space. Conversely, in Atchison, the liquor bottles and cigarette packs collected dust on store shelves while gas pumps remained unused. The higher excise taxes in Kansas on these products drove business away from my home state and into her eastern neighbor’s economy.

This scenario soon may become a distant memory. The American Cancer Society is leading a coalition that submitted a ballot initiative to the Missouri Secretary of State on Sept. 20. The proposed measure is expected to generate $308 million annually through tax increases on tobacco products, primarily cigarettes.

A similar initiative failed in 2002 and 2006. Like the 2006 vote, this initiative includes a proposed 80-cent increase in the cigarette tax, bumping the total tax to 97 cents if passed. This proposition, however, will not affect just the Show-Me State, but surrounding states as well, a point the Show-Me Institute has covered in the past. As David Stokes, a policy analyst for the institute, alluded to in an Aug. 4 blog post and video, Missouri’s neighbors often are propelled to make tobacco purchases in this state because of its attractively low cigarette tax.

The cigarette tax in Kansas now stands at 79 cents, 18 cents cheaper than the proposed tax increase in Missouri. What is intended to be a profitable deal for Missouri will prove to be more beneficial for the state of Kansas. The incentive for Kansas to cross the border in pursuit of a cheaper pack will be eliminated. Missouri stands to lose some revenue from the current cigarette tax; other revenue-increasing proposals, such as the fair tax, would not balance out this budget loss.

Should this initiative pass, the eastbound cigarette-seeking Kansans who flood into this state might be replaced by Missourians driving in the opposite direction.

The post The Missouri Cigarette Tax: A Partial Solution to Kansas’ Economic Woes appeared first on Show-Me Institute.

The USPSTF based its guidelines on the results of a poorly conducted study. Some of the data is predicated on decades old studies, which were conducted when mammography was very different than it is today. The American Cancer Society looked at the all the data and additional studies, and came to the opposite conclusion. Out of all breast cancer deaths, 17 percent occurred in women who were diagnosed from ages 40 to 49, and deaths of similar women would substantially increase if women were not screened until their 50s.

Additionally, the USPSTF study did not take into account more recent studies or changes in health technology, like digital mammography, which is more effective for finding tumors in dense breast tissue — something more common in women aged 40 to 50, the very group that USPSTF recommended against receiving annual mammography. The group’s recommendation may have made sense a few decades ago, when some of the studies originally came out, but it does not make sense in light of today’s constantly improving technology.

Potential anxiety over false positives and overtreatment supposedly justify the USPSTF’s recommendation. Yes, overtreatment might be a problem, but most women (if they are going to get a mammogram) are trying to detect a potentially deadly disease. Personally, I would prefer to get a false positive than to miss a fatal true positive. When I turn 40, I want to be able to get a mammogram. I want to have the choice either to select an insurance company that covers it, or to be able to pay for the test out of pocket.

This may not be an option very soon. At the end of her post, Chrissy wrote:

Paranthetically, I want to point out that the guidelines issued by the U.S. Preventive Services Task Force are normative and non-binding. The panel isn’t banning anything. A person can get a mammogram or a PSA test at any age if she or he has both the desire and the ability to pay for them, either via insurance or out of pocket.

This is true — but not entirely true. The recently proposed federal health reform legislation specified that insurance companies and Medicare will cover what USPSTF recommends. Even now, certain insurance companies and Medicare base their compensation decisions in part on the USPSTF guidelines. This is a real problem. It is illegal to accept Medicare money outside of the Medicare system (if a doctor takes any Medicare patients), so it could conceivably become illegal for non-recommended breast exams. This may not have been USPSTF’s intention, but unintended consequences always need to be considered.

The USPSTF’s recommendtion is a great preview of what it would be like if the National Health Institute of Clinical Excellence (NICE) or a governmental group were making health decisions for the United States. The USPSTF’s study was poorly conducted — but it will still have repercussions for insurance coverage if it or any government entity chooses what constitutes a proper private insurance plan.

I completely agree with Chrissy that when taxpayer funds are involved, cost-effectiveness needs to be considered. But, when health is involved, most individuals would like to make the decision — and pay for it themselves — than to let a government organization like USPSTF base life-and-death decisions on questionable science.

The post It’s Nice That the USPSTF Isn’t NICE … For Now appeared first on Show-Me Institute.

It doesn’t seem fair to impose all this scrutiny on charter schools without doing anything about the failing traditional public schools that spurred the charter movement in the first place. The article notes that 43 percent of traditional public schools in Ohio’s cities are failing, too. Where is the effort to close them? Charters are trying to reverse a trend of academic failure that has persisted for decades. They won’t all be able to do that overnight. The point is made by one priceless quote from the article about the Ohio attorney general’s plan:

“This is like suing the American Cancer Society just because they haven’t yet cured cancer."

Fortunately for Missourians who like charter schools, the disaster in the St. Louis Public Schools makes even the least successful charters look like John Burroughs by comparison.

The post Charters Held to a Higher Standard appeared first on Show-Me Institute.