Obama budget proposes 94-cent cigarette tax to fund pre-k

Posted By Kristen Butler, UPI.com  |  April 10, 2013 at 4:27 PM
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President Barack Obama’s proposed budget would increase taxes by $580 billion over the next decade, but it relies on many proposals that have been repeatedly rejected by Congress.

One such proposal is an increase in the cigarette tax -- an additional $0.94 per pack would raise an estimated $78 billion over the next decade, which would go toward early childhood education.

The funds would provide all four-year olds from low- and moderate-income families with high-quality preschool through a $750 million investment in discretionary Preschool Development Grants.

The rest of the preschool initiative includes $1.4 billion for new Early Head Start Child Care Partnerships, $7 billion in child care subsidies and $15 billion to expand voluntary home-testing, all over 10 years, reports Business Insider.

The president's budget said there were added public health benefits to the extra tax on cigarettes, noting that "researchers have found that raising taxes on cigarettes significantly reduces consumption, with especially large effects on youth smoking."

CNN Money reports that after a 62-cent-a-pack tax hike was passed in 2009, cigarette sales dropped by 10 percent. The current federal tax rate is $1.01 a pack, so the new proposal would increase it to $1.95.

Some states already implement their own cigarette taxes. In New York City, the country's highest-tax area, combined state and local taxes add up to $5.85 per pack,meaning a pack of smokes in Manhattan can cost $14.

The median household income for a smoker in 2011 was $27,700 compared to $45,761 for nonsmokers, according to Reynolds American, a cigarette maker against the tax. Nearly half of all smokers had a household income of less than $25,000 a year, while under 15 percent of smokers had a household income over $75,000.

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