The South Carolina Policy Council Archive

Limited Government | Free Enterprise | Individual Liberty

Taxes & Regulation

No Taxation Through Litigation

BySouth Carolina Policy Council

Jun 5, 1998 #Cigarette Taxes

Written by: Peter J. Ferrara

In his State of the Union Address in January, 1999, President Clinton announced that the Justice Dept. is preparing a litigation plan to take the tobacco companies to court. Clinton had ordered the Justice Dept. to sue cigarette manufacturers to recover the alleged costs paid by Medicare to treat smoking related illnesses.

This follows a previous joint suit by the states against these companies to recover the alleged smoking related costs of Medicaid.
That settlement effectively imposed a tax increase on smokers of $250 billion over the 25 year period, or about 45 cents a pack, as the cigarette prices paid by smokers are the only source of funds to finance these settlement payments. In effect, the cigarette prices paid by consumers will be $250 billion higher overall during the next 25 years, due to this settlement.

These suits are primary examples of a dangerous new trend. As the strong opposition of voters to higher taxes has generally stopped overt, legislated tax increases in Congress and state legislatures, the forces of Big Government are turning to other, more hidden means of raising taxes. Perhaps the most dangerous of these is taxation through litigation.

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By South Carolina Policy Council

Since 1986 the South Carolina Policy Council Education Foundation has advocated innovative policy ideas that advance the principles of limited government and free enterprise. The Policy Council is the state’s meeting place for business leaders, policymakers, and academics – as well as engaged citizens – who want to see South Carolina become the most free state in the nation. For questions or comments on the articles on this website, please email Research Director Jamie Murguia.

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54 thoughts on “No Taxation Through Litigation”

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