by Scott Shackford, Reason.com
When you tax something, you get less of it. It’s a fundamental rule most creators of government economic policy know or at least claim to know. The rule has been used for Nanny State meddling for ages, piling on bigger taxes on disliked consumer goods like cigarettes, gasoline, and alcohol. The revenue can be used for good things, proponents say, like government programs to help children, the environment, and improve citizens’ health.
There’s an obvious flaw here – if the paternalistic nudging works, less money will be spent on the taxed goods, which then reduces the revenue for government programs (and the employees – both public and private – whose livelihoods have grown dependent on them) the taxes created in the first place. California has seen this in its children’s programs funded by the state’s cigarette taxes. California’s gas taxes went from the second-highest in the country to the highest in the country entirely to make up for the loss of revenue caused by people buying less gas, an obvious and predictable outcome of having such high gas taxes.
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