Tuesday, March 27, 2012

Cig tax isn't a tax?

I didn't read the Supreme Court arguments yesterday, so I just saw this bit out of context:

Most of the justices seemed skeptical. Some questioned whether the penalty for failing to buy insurance is a tax at all, meaning the law wouldn't apply. Justice Ruth Bader Ginsburg said, "This is not a revenue-raising measure, because if it is successful, no one will pay the penalty."

If Ginsburg said that since a penalty is meant to discourage behavior it's not a tax, then no Pigouvian tax counts as a tax. The gas tax isn't a tax. The cigarette tax isn't a tax. It's a strange view of the English language. (She might think the "right-to-seek medical care while uninsured" tax is different because in theory no one would pay it, but that's not true. If the tax were meant to discourage everyone it would just be set at $10 trillion.)

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