Correction, please!

ITEM: "Massive increases in cigarette taxes that 20 U.S. states are enacting to help plug budget holes are so far swelling coffers as expected despite also raising sales of 'contraband' smokes, states say," said a Reuters dispatch in the San Diego Union-Tribune for October 31st.

Tobacco Tax Crime Cancer

CORRECTION: That the "coffers" are swelling is greatly overstated. "Between 1992 and 2000, the average state cigarette tax rate increased 64 percent while gross state tax revenues rose only 35 percent," observes Bruce Bartlett of the National Center for Policy Analysis. "The apparent fall in smoking rates over this period was not nearly enough to account for the revenue shortfall. This suggests that states expecting higher revenues from recent cigarette tax increases may never see them."

In fact, what should have been anticipated is occurring: The huge tax increases have led to much more smuggling, benefiting organized crime and even terrorists. As the Washington Post reports, there is now a "vast and burgeoning underworld of criminals" involved in smuggling. "Criminals who once dealt exclusively in illegal drugs are now smuggling cigarettes because it is so lucrative and punishments generally are much less severe." Jerry Bowerman, a top official of the Bureau of Alcohol, Tobacco and Firearms, says: "Cigarettes are becoming a smuggler's paradise." One interstate run can bring in $600,000 for a truckload, says an analyst.

Hezbollah terrorists have benefited from an operation between North Carolina and Michigan, reports U.S. News & World Report -- which also describes how cigarette smuggling has helped al-Qaeda and Saddam Hussein's Iraqi regime.

Meanwhile, New York Mayor Michael Bloomberg, a reformed smoker, is moving to ban smoking in bars and restaurants, pool halls and bowling alleys -- even private clubs. Tax hikes pushed "the cost of a pack to around $7.50, the highest in the country," reports USA Today. "Retail sales have dropped almost 50% since the price increase July 2, and smuggling and Internet sales are thought to have increased substantially."

Progressive Tax Fallacies

ITEM: The Bush administration's "domestic policies," asserted syndicated columnist Paul Krugman in the October 30th Seattle Post-Intelligencer, "are designed to benefit a very small number of people -- basically those who earn at least $300,000 a year...."

CORRECTION: Krugman is riffing here on one of his habitual themes -- the horrors of tax cuts. Consider those supposedly getting a free pass. The wealthiest 1 percent pay well over a third of income taxes. Specifically, the top 1 percent of tax filers, according to 2000 Internal Revenue Service figures, make $313,469 or more in "adjusted gross income." They pay 37.42 percent of federal personal income taxes, up slightly from the previous year.

The top 5 percent, making $128,336 or more, pay more than half the taxes (56.47 percent). Meanwhile, those in the entire bottom half of income pay only 3.91 percent. Progressive income taxation aims to punish those who earn "too much."

Steep progressive tax rates also mean reductions are harder to achieve-- since duplicitous critics inevitably claim these as windfalls for the rich. As the Associated Press has put it, the built-in disparity hurts tax-cutters, "because any across-the-board reduction" is condemned for benefiting "the wealthy while siphoning away money from government programs."

Watered Down Science

ITEM: The Bush White House has proven "hostile to Clinton Administration environmental regulations," said a wire-service account in the Environmental News Network on October 25th--citing a report by the majority staff of the Senate Governmental Affairs Committee. Said the AP, the panel concluded that, "President Bush 's review of a Clinton-era standard to mandate lower arsenic levels in drinking water was a waste of time."

CORRECTION: The Bush administration has actually complied dutifully with the previous diktat lowering arsenic levels. The existing standard, extant for a half-century, permits 50 parts per billion in drinking water. Yet the Clinton administration (and now the Bush administration) would arbitrarily slap it down to 10 ppb.

Regulatory fans have cited a study by the National Academy of Sciences to justify the lower threshold. Yet, as the Rocky Mountain News has observed, that very study "also worried about the lack of good epidemiological studies that show a causal relationship between 'lower concentrations' of arsenic and cancer. Indeed, the academy called for more studies to clarify the risk, if any, of arsenic at extremely low levels."

Small and rural municipalities will be hurt the most, says the Competitive Enterprise Institute. These municipalities will be required to spend scarce budget resources, asserts GEL, to eliminate "what are already virtually undetectable particles without any measurable human health benefit." As GEI's Angela Logomasini says, "Many poor Americans will likely suffer disconnection from their current water supply to avoid the costly regulations, leaving the public to access water from substandard sources."