Proposed Tobacco Tax Cannot Sustainably Fund Preschool Assistance

U.S. Secretary of Education Arne Duncan recently visited St. Louis to promote the President’s education agenda, which includes a proposal to make preschool financially accessible for low- and middle-income families with four-year-old children. The federal funds for the program, which Missouri would have to contribute $4.8 million to access, will come from a proposed tobacco tax.

While universal early childhood education is a worthy goal, funding this program through a tobacco tax is regressive and short-sighted. Low-income tobacco users will be disproportionately affected by the tax increase because Americans below the federal poverty line are more likely to smoke than those at or above the FPL. These individuals also lack discretionary income and will be hardest hit by any price increase.

Proponents of the tobacco tax claim that it will cause people to quit smoking while generating needed revenue, but they cannot have it both ways. Excise taxes are often implemented to discourage the taxed behavior, so their revenues are meant to decline over time as people give up the habit or product.

Tobacco taxes have already cut down smoking rates in the US, especially among teens. The Congressional Budget Office estimated that if the US increased the tax on each pack of cigarettes by 50 cents, there would be 1.4 million fewer smokers by 2021. This is a very positive health outcome, but it means that the tobacco tax base is very unstable. If this new tax is successful, more people will give up tobacco and, as a result, the tax will bring in less money for preschool assistance.

When revenue from the tobacco tax wanes, future lawmakers will have to decide how to bridge the funding gap. They will have to choose between raising taxes, cutting funds from another program, or ending preschool assistance. None of these are positive outcomes.

The President’s initiative is hardly a responsible way to fund a new education program. If we truly want to help families, lawmakers must look for a stable, long-term funding source that does not rely on people continuing to smoke despite the cost and health risks. Basing preschool assistance on a tax that will decline over time is unfair to the families and children the program seeks to serve.