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Washington Proposes New Federal Tax on Tobacco

uncle sam taxes

Early this month Washington proposed a federal tobacco-tax hike to pay for federal funding to guarantee preschool and full-day kindergarten for children from low- and middle-income families, according to the Washington Times.

This tobacco tax was not specified in severity or even regarding an amount specified. However if it is to guarantee preschool and full-day kindergarten for all low and middle income families then the assumption is that it needs to be a very large amount.

For the average family in the United States it runs roughly $372 to $1,100 monthly for pre-school. Daycare is a multi-billion dollar business in the United States. According to federal reports, pre-school and daycare costs alone cost consumers $50 billion a year. Assuming that only 1/3 of the population takes advantage of the proposed program of funding daycare though the Tobacco taxes the scope must be near $17 billion.

These numbers of course were just an educated guess on what the tobacco tax must be based on the above report. If it’s typical of federally sponsored taxes then the responsibility most likely will fall on the retailer of cigars which in turn would lead to an overall price increase on cigars and other tobacco products.

Nothing other than the mention of it made the news reports, and it’s also worth nothing that the tobacco tax is only referenced in the last line of the article. It’s still worth keeping an eye on it and as promised we do our best to report on any tax increases on the way. A tax on the federal level might come as an overnight sneak attack similar to how our friends in Canada were greeted with last month. In that case there was zero warning.