How Much is the Government Making Off of Tobacco?

It’s no secret that the government taxes our spending– in fact, sales tax is one of the main ways that the government brings in money. But there are a number of other items that have their own additional taxes imposed, whether at the state or federal level. And, when it comes to cigarettes, the consumer pays both. Would it be right to call this a tax on one’s vice, or sin? While we don’t claim to be any moral authority, the figures and statistics are quite interesting.

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  1. michaeljmcfadden,
    How much does the U.S government spend on healthcare for smokers compared to the amount it makes on taxes? I’m having trouble getting a good estimate anywhere else. Any help would be greatly appreciated. I’m about to give a speech on this subject, and I hope to show that anti-smokers do not have a solid case.

    • “Interested” asked for more details on health care expenditures vs taxes for tobacco products. The best source I can point to is what I led off with a couple of years ago here in the comments:

      Google:
      Pflicht viscusi mcfadden
      and read “Taxes, Costs, and the MSA.”

      While that chapter of “Dissecting Antismokers’ Brains” was written ten years ago, it is still substantially solid. If anything, the tax payments have increased disproportionately to general inflation due to antismoking pressures and the perception by politicians that they can “get away with” cigarette tax increases without the level of complaints that accompany other tax increases.

      - MJM

    • My question would be how much money does the US government spend on healthcare for fast food junkies? Why don’t we attack that industry? Where does it stop?

  2. Great put up, very informative. I wonder why the other specialists of this sector don’t realize this. You should continue your writing. I’m sure, you’ve a great readers’ base already!|What’s Going down i am new to this, I stumbled upon this I have found It absolutely useful and it has helped me out loads. I’m hoping to give a contribution & assist other customers like its aided me. Good job.

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  4. You can go on about how bad it is for your health, but let me pose a question. What do you think would happen if there was not a single person in the nation that smoked, or drank alcohol for that matter? The government would lose its mind. I wouldn’t even be surprised if they lifted the ban on smoking ads for television.

    • I am a smoker, and I have no desire to quit. All if you whom are against it, stop and think a moment…..without the tax dollars from revenue the government is lost. Therefore your taxes would go up if there was a complete ban. The money from tax dollars goes to schools, medical, roadwork etc. Why not impose a non-smokers tax see how it feels. People get off your high horses, smoking is not the blame to all, why don’t you look to the way they are raising animals, the chemicals that are now induced into foods etc. They pump chicken so they grow faster etc….And your worried about second hand smoke. Really pathetic. Your feeding your children worse, with all the fast food chains. Smokers have rights too, however they are slowly being taken away. So much for freedom!!!! I personally believe that there should be smoking only establishments, with signs on the doors saying enter at your own risk!! Guarantee you the establishment would be reaping in a mighty profit!!

      Ticked off at all the garbage from people!

      • I wonder if you get lung cancer will you continue to smoke? Will you want to? According to the surgeon general, the right to breathe fresh air is over any right to hurt someone else’s air supply.

      • Fed, you’d probably enjoy reading and sharing my “Lies Behind The Smoking Bans.” Just Google “V.Gen5H” in quotes just like that and you’ll find the .pdf file freely available! Enjoy!

        Any substantive comments or criticisms welcome!

        :)
        MJM

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  8. Question: How much does the average smoker actually contribute to the economy per year? I wish I could actually see the income numbers.

    • Thats probably impossible to be able to figure out because of the simple factor that some smokers go through one pack a day to 4 packs a day. it all depends on the smoker.

      • Justin, yes, due to the wild variation (anywhere from one or two cigarettes per day up to several packs) an “average” isn’t very informative. However, overall, according to the research I cited in the “Taxes, Social Costs, and the MSA” I referenced in another posting here, if everyone quit smoking tomorrow, health care costs would go down for a couple of years and then climb to about 10% above what they would have otherwise been. Here in the States, that would be an extra $200 billion or so annual cost to the economy. Of course that’s not an argument for smoking, but it’s an effective counterpoint when people try to strip away freedoms on the basis of arguments about dollars.

        - MJM

  9. Mitch,
    On your comments from Oct.6,2012. You are so right about Our Presidents’ Lies and political views.You have pointed out this one example and there are many more. Yes, he is our Presedent and I support all of our Presedents in office. Yet I will never support unfair Taxes and backdoor prohabition that has occured with Tobacco users.

  10. Hold on to your wallets………..Obama and the Dems. are at it once again…….Spend…Spend…and Spend some more………Then Raise TAXES……Forget about the unbalanced buget or 16 Trillion owed……
    Wasnt Obama a smoker at one point in time?
    I hear that Obama home town of Chicago has gone after another City Tobacco Tax on top of the existing taxes the City,State and Feds have.This should bring them close to Mayor Bloomburge in New York City taxes and prices. I dont recall any town hall meetings during the election with the Tobacco Taxes or usage rights.Less Rights and Unfair Taxation under a goverment without representation…..Is this the America that we have become?

  11. I’m really impressed with your writing skills as well as with the structure to your blog. Is that this a paid subject matter or did you modify it your self? Either way keep up the excellent high quality writing, it’s rare to peer a nice blog like this one these days..

  12. Stingray, Obama knew that nonsmokers would never accept a tax increase of the size he needed to cover children’s health insurance. And nonsmokers are a huge majority of the vote out there. Soooo…. he simply targeted smokers to pay for everyone.

    AND… after he did it, he turned around and LIED about it on national television! See the 30 second clip by entering:

    (“bare-faced lie” AND gasdoc)

    in parentheses just like that into Google and choose the July 23rd, 2009 entry to see him pass off America’s 40 million smokers as if we were nothing more than vermin.

    - MJM

  13. Observation and Reply:
    This is a subject of Taxation by the Federal and State Goverments against the citizens of the United States. Does the Goverment provide the citizens and thuss the Tobacco users a Fair representation in the Taxes mandaded by Law?
    I have seen many Tax increases over the years concerning Tobacco.I have never seen the accountability of those Tax dollars from the collectors.Some Tax form Tobacco wasw said to be for Childends heath care!! What is that about? I think it was the last $ 1 (one dollar) tax increase by the feds.Why should smokers pay for the health care of children when that burden should be carried by all..What is and continues to happen is a backdoor prohabition against smokers by the goverment and nextdoor nieghors.A smoker should be able to live free in this country without the burden of unfair taxes or a second class citizen.
    Furthermore, A life long smoker should be able to collect premium heath care and a casket when they expire. Having payed all the burden of a unfair tax load.
    Live Free and be an American Again,

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    • Hi,
      Thank you. We’re glad you like it. Check back for more interesting information.

      Lisa Greene-Lewis

  17. It’s difficult to find knowledgeable people on this subject, but you seem like you know what you’re talking about! Thanks

  18. Actually Jed, when you drink, I am forced to ingest the highly volatile and carcinogenic alcohol fumes evaporating from your drink. You don’t see or smell them, but they ARE there, and using the Antismokers’ arguments of “No Safe Level!” then drinking should obviously be banned from public settings like bars and restaurants. After all, why should those poor workers be forced to work under such conditions?
    See my writing at the British Medical Journal on this: Google these four terms without quotes and read my “Secondary Smoke, Alcohol and Deaths” there:

    martini mcfadden USDHHS viscusi

    Also: regarding the repeated claims here that cigarette taxes are going to cover the health care of smokers, that is simply false: Smokers are actually subsidizing the health care of NONsmokers. To see the fully referenced argument on that, Google:

    Pflicht viscusi mcfadden

    and read “Taxes, Costs, and the MSA.” If anyone has any specific, substantive criticisms or questions about either piece, feel free to share them here: I’ll be happy to respond!

    - MJM

  19. Whats sad is that people can’t see what they are doing!!! All there problems that are happening!!! Most of the deaths that happen from smoking are from 2nd hand smoking. It’s really sad! It’s almos suiside!!! Your going to die sooner or later!!! Your killing your self!!!

    • Where are you getting your information? The only information reported on second hand smoke deaths is estimated because it cant truly be known. I personally think the number is exaggerated, but according to the last census, second hand smoking deaths are estimated to be an extremely small portion of tobacco related deaths. The Government keeps reducing the places a person can smoke under the guise of public health. Since it is so hazardous, why don’t they ban it? The reason is simple, it generates a lot of revenue.

      • Regarding the observation/question about “secondhand smoke deaths,” think about this:

        The original number of “3,000 deaths from Lung Cancer” was produced in 1988, after 30 years or more of smoking being allowed everywhere from movie theaters to maternity wards.

        It’s now 25 years later, and smoking in 90% of those locations has been forbidden for the better part of 20 years. So what’s happened to that “3,000 deaths” number? Heh, it’s gone UP to 3,400 deaths.

        Ever get the feeling that the fanatics might be lying to you? See some of the studies discussed and analysed at http://TobakkoNacht.com and see what you think.

        - MJM

      • I have NO idea why I get emails telling me there are “new” comments here, then when I stop in to respond I suddenly find out the new comment was made six months earlier.

        Am I living in a computer time warp?

        - MJM

  20. Insurance cost, Please!!! Dozens of people at my work are playing the ” Medical Leave ” game, none of them smokers but thats OK with you! I have stopped smoking and the most rewarding thing is not health or money saved but the tax dollars you whinny non smokers are going to have to suck up from the tax dollars that arent there from my pack of cigarettes! Puff on that one bub!

  21. Sorry! I didn’t realize just how old this thread was. Most of the people I asked questions of will probably not even see them so if they don’t respond it shouldn’t be held against them! I’ll still check back though.

    - MJM

  22. How many of you holier than thou people do everything perfectly. You bash smokers while 95% of you have driven over the legal drinking limit! The point is not the smokers the point is the tax! They can tax us as much as they want on whatever item they feel like!

  23. obviously U.S. and other countries trying to extort money from china through tobacco and carbon emission taxes,both are the wrong way to do business and the U.S. is suffering the consequences of self taxation.Coal a U.S. natural abundant resource could produce power for the next 1000 years,using clean coal technology,but coal power plants are being demolished and the only backup plan is poisonous nuclear power,with no 100,000 year storage or containment plan.Gas and cigarette prices taking what little money consumers have to spend

  24. Number of cigarettes smoked annually in the U.S.=331 BILLION.

    331 billion divided by 20= 16.5 BILLION packs.

    16.5 billion packs times $1.0066=$16.6 BILLION in federal tax.

    Why does your graph show tax dollars in the millions? And forgetting all about state taxes;what is our federal government doing with all that money?

  25. Cigarettes exist for taxes and population control…all the anti-smoking talk and campaigns are for show.. If the govt wanted to it could outlaw them tomorrow but then they’d go broke and not enough people would die from smoking related causes…

    Consider ourselves… “Free Range Humans”

  26. It looks like state governments are as addicted to cigarette taxes as smokers are to cigarettes! If not, why wouldn’t they ban such a dangerous product?

    • they might be addicted to the money…but all the money is going to pay for the medical Heath of people who smoke.

    • They mat be addicted to the money…but most of it is going toward paying for the health problems of smoking

  27. The whole idea behind tobacco tax is to encourage people to smoke less but over time the real reason seems to have disappeared and the tobacco tax was seen as a way to generate more revenue for the state.

    This represents another good idea that took on a different path due to politics.

  28. At least when I drink you don’t have too swallow. When you smoke I’m forced to breathe in your habit.

    Take it outside please.

    • Jed, you do not have to be around me, if you do not like my smole then you have the right to go away from me. I do not come to your property and smoke, do not come around me and complain about my smoke. Nobody is forcing you to be where I am.

  29. In the first graph, looks like Federal Collections should be read and State Collections should be blue

  30. The problem is, it is nobody’s damn business what I take into my body. Rat poison or cigarettes. Keep your hands off my body! It is a supposidly free country, but don’t try to sit in your back yard smoking a joint, or they will arrest you. The only reason that cigarettes and alcohol are still allowed is that they can collect these “sin” taxes on them. It is time to take the government out of our personal lives. It’s time we wrested control of our bodies back from the government.

    • But what about the harmful effects of cigarettes on the environment? Cigarette butts account for around 24.7% of the world’s garbage each year. What about the harmful effects of cigarettes on non-smokers from secondhand smoke? Secondhand smoke lingers in the air, even in the open, and causes cardiovascular problems in individuals.

      • Stephanie, I challenge you to find even ONE actual scientific study available for us to read here on the net showing ANY real harm to people from outdoor smoking levels. Please look… you’ll find there aren’t any. You also won’t find any showing harm from the amounts of smoke you’d commonly find today in any decently ventilated workplace environment that allows smoking.

        And finally, your “garbage” statistic is just … well… garbage. I don’t know where you got it from, but I can guess how it was arrived at. They probably extrapolated from counting “units” of trash found on beaches or on city sidewalks outside of bars etc here in the States. Am I correct? And a cigarette butt floating in a lake is counted as being equal to an abandoned car in the same lake?

        - MJM

  31. I think the first graphic is missing at least 3 zeros on the Y axis. I suspect the numbers are billions, not millions. The graphs that follow would tend to support that theory.

    Mark

    • Matt, taxes is just a way of government robbing us. they are so big and powerful now that we do not have a chance against them unless we all stand together. As long as we pay taxes, the government gets sronger and stronger and they will always come up with a way to rob us and take away more of our rights.

  32. Who cares … seriously. Its time to quit smoking, you are doing nothing but wasting vast amounts of cash on something that is slowly killing you.

    My grandfather quit smoking after 30+ years of it and I quit after 15 years. If we were both able to do it without going back, you can do it too.

  33. It would be nice to see the unprecedentedly huge settlement monies included in the infographics too. These lawsuit monies were to go toward healthcare. Remember?

  34. If only we’d used those brainwashing resources against the fast food industry instead of tobacco. Smokers are healthier than the obese, and that’s a fact Jack. Gluttony kills.

  35. Dan:

    It has been done. Fact of the matter is, only a very small percentage of cigarettes taxes are actually allocated for the “intended purpose”. In fact, it’s the major reason there’s an unethical fight and smear campaign being launched against the “electronic cigarette” despite the many studies showing they are safe. They are seriously cutting into the sin tax profits states are misappropriating.

    • Thank you! Atleast some people out there realize the TRUTH behind the FDA’S claims. The FDA is backed by the tobacco industry and if they cant regualte them like tobacco and get billions of dollars they will come up with every excuse to ban them. For example: they said an e-cig contains propylene glocol..a chemical in anti-freeze..what they dont mention is that exact same chemical is also in cheese. They also have made everyone believe that nicotine is bad. They dont let everyone k ow that nicotine by itself is no worse than caffeine….and that ypu can even get nicotine in tomatoes…it doesnt have to be a tobbacco byproduct

  36. The problem with comparing to health care costs associated with tobacco usage is a futile exercise since a majority of health issues attributed to smoking are subjective. If a person dies of lung cancer and does not smoke it is attributed to genetics. Now if that same person smoked then it would be attributed to cigarettes. The whole campaign against smoking is simply a ruse to put more money in the government pockets. It’s an easy target.

  37. How about including the money saved on healthcare by so many smokers dying young?

    In the UK they did this and the savings on geriatric care and pensions outweighed the extra healthcare required by live smokers many times over.

    Obviously a different situation in the US without state funded healthcare and pensions.

  38. But with all this money coming in how much goes right back out to pay for lung cancer treatments, heart disease, in home & assisted living costs for people on oxygen and 50 other health problems caused by smoking ?

    I never understood this about Obamas health care reform. He said the uninsured were costing the health care industry billions or however much every year, so now everyone is suppose to have insurance or be fined ?

    What about himself ? He is a smoker and still smokes, what about the billions of $$ is costs to care for all of them ?

    • Bob, I’d suggest the same reading for you that I just suggested above for Chelsea. If you have any specific, substantive criticisms of anything I wrote there please feel free to share them here: I promise I won’t mind, and I’ll try to stop back to respond.

      - MJM

      • Well, why focus on the money? Why focus on what is earned from cigarettes or what is lost? What about the lives that are lost and people’s health that is destroyed? Why is money more important than people’s health and lives? I’m still undecided as to whether cigarette smoking should be banned completely or whether it should be banned in public places but still be allowed in private.

      • im sorry i dont know how to put this lightly but what people do to themselvs is absolutly nobody elses bussiness but there own are you going to tell them to quit smoking wat do you think they will say?you look at smoking wrong.look at it like this its a recreation its lesisure time.luxury.indeed its a luxury.people feel good when they smoke and in exchange they trade thier health it would be bad to yo to smoke.but others enjoy it .understand?

      • Stephanie, you say “Why focus on the money?” Well, if you look up to the top of this page, that’s what the article is about. If you look around you’ll find that it’s usually the ANTIsmokers who yell about money all the time: either they want more from the government and smokers for their programs or they lie about smokers costing nonsmokers money for health care — despite, as you saw above in my well-referenced link, the fact that smokers overall cost taxpayers LESS than nonsmokers!

        - MJM

  39. I wonder what this infographic would look like if it compared this data to the money spent on health care and other things that are caused by tobacco consumption.

      • Chelsea, I would recommend you read my short and well-referenced online piece, “Taxes, Social Costs, and the MSA” at:

        You will find a well referenced argument that smokers are actually subsidizing the lifetime healthcare costs of NONsmokers — so the reverse of the intent of Dan’s suggestion is likely to be what you’ll eventually find.

        I’d also suggest including sales taxes and the MSA tax on smokers. I believe those add about another ten billion dollars or so in extra taxes that smokers are contributing to everyone else.

        Michael J. McFadden
        Author of “Dissecting Antismokers’ Brains”

    • Good question Dan. I say tax it another couple dollars to fund the Reform Costs. I’d also legalize marijuanna and tax the daylights out of it too help.

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