Smokers in New York State earning less than $30,000 a year spent spent 25% of their income on cigarettes, according to a new study from the American Cancer Society. Even more surprising, they paid nearly 40% percent of New York's cigarette tax revenue.
This extraordinary stat reminds me of another extraordinary stat: That households earning less than $13,000 a year -- so, considerably poorer than the population ACS studied -- spend a shocking 9% of their money on lottery tickets. I have no reason to think that either statistic is definitely wrong, but both stats strain credulity, at least judged against aggregate data compiled by the Consumer Expenditure Survey.
Here's the CES data on the poorest 40% of Americans, who spend an average $25,000 a year. They use 15% of their income on food, 40% of their income on housing, 4% on clothes, 15% on transportation, 8% on health care, 5% on entertainment, and about 1.5% on "tobacco products and smoking supplies." Don't pay too much attention to the 1.5% figure, since smoking isn't the kind of thing that all households do in similar moderation: There are addicts and there are those who don't touch the stuff, so the average number doesn't mean much. I'm more interested in the fact that New York smokers spend more on their recreational addiction than the average low income family spends on transportation, entertainment, and clothes, combined -- and this in a state with high taxes and living costs.
How the Low-Income Spend Money
Smoking advocates claim the study proves that high cigarette taxes are "regressive and ineffective." Well, they are regressive. You can't "means-test" a sin tax, unless you require every bodega owner to ask for IRS documents. Also, I don't know that the study proves the tax is ineffective. A sin tax has two purposes: (1) to discourage a behavior that imposes a social cost, like inevitable health care costs; and (2) to raise money in the event that the behavior is discouraged. It's really awful that low-income families are paying nearly half of total cigarette taxes, but the tax is working. Smoking rates in New York are at record lows.
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