You did not present a reasoned argument as to why this is a mistake. Taxes are one way to incentivize behavior AND ALWAYS HAVE BEEN, historically.
> The only question is how to raise those funds fairly.
This is not the only question, specifically because "fair" has a philosophical answer, not an objective one.
> It's not a penalty
That's a matter of perspective. It's bad because it's regressive (historically), as you allude. It's not like there can't be a better sliding scale based on cost/consumption indexes but that's not practical in a country as large and disparate as say... the USA.
I did. I argued:
1) The goal of incentivizing/deincentivizing behavior comes into conflict with the goal of raising revenue for government services. For example, people have suggested high taxes on cigarettes and gasoline. But if you significantly reduce consumption of products, then you limit the ability of the government to raise revenue from sales of those products.
2) It's a free country, and thus the government has no business trying to do Skinnerean behavior modification on the populace. IMO that's a pretty disgusting idea and reeks of totalitarianism.
3) Income taxes do not actually stop people in any way from trying to better themselves financially. There is simply no empirical evidence of this.
> "fair" has a philosophical answer, not an objective one.
Yes, so?
Generally speaking, you want to incentivize people to try to better themselves financially by pursuing highly productive and legal activity. If the best way to better yourself financially is rent-seeking, becoming a government bureaucrat, corruption, or participating in the gray/black market, that is what you will get.
Anything you tax you should be ready to have less of, and anything you subsidize you should expect to have more of.
They are positive in a free market economy because you can let the market find less damaging alternatives. Without them you rely on more legislation which tends to be ham-fisted and full of holes.
This ends up just penalizing poor people. Cigarettes are addictive. Higher taxes don't magically cure addictions. Anyway, lots of things in the world are bad for you. But it's a free country. If someone wants to smoke and drink and eat a bunch of junk and never exercise, they have that right. There are a ton of "bad" things you could tax, it's an endless futile exercise.
> high fuel taxes to reduce pollution
Does this actually even work? My own driving behavior is completely unaffected by gas prices. People still need to go places. It seems to me that convenient public transportation would do better in affecting behavior. If public transport is crap/inconvenient/nonexistent, people won't use it.
[1] Bader P, Boisclair D, Ferrence R. Effects of tobacco taxation and pricing on smoking behavior in high risk populations: a knowledge synthesis. Int J Environ Res Public Health. 2011;8(11):4118-4139. doi:10.3390/ijerph8114118
Quote from the above article:
"There was strong evidence that raising cigarette prices through increased taxes is a more effective tobacco control policy measure for reducing smoking behavior among youth, young adults, and persons of low socioeconomic status, compared to the general population."
That's great, for the small percentage of people who quit smoking. But for the majority who continue smoking after higher taxes, it is indeed as I said, "This ends up just penalizing poor people." It's blatantly obvious if you go to any convenience store that smoking has not been stopped by higher cigarette taxes, and thus a lot of people are simply paying more in taxes while continuing to smoke.
It's interesting that the article talks about the effect of cigarette taxes on youth, because currently in the US, retailers are forbidden to sell any nicotine product to anyone under age 21. If anything, it seems that the issue is not taxes but rather our extremely lax enforcement of the law against selling cigarettes to minors.
Possibly. But neither the article author nor anybody else is suggesting a 500% sales tax.
Moreover, super high sales tax that significantly reduces consumption directly conflicts with the original goal of taxes: to raise revenue for government services.
But after all the cigarette butts we don’t make a fuzz about the tobacco industry’s agency any more; they were just vessels for the lifestyle choices of the smokers.
Weed is still illegal in a lot of places. I guess because you can make less of a profit off of it compared to certain pharmaceuticals. Things are opening up though, perhaps in the US in particular.
There are 2 issues here:
1) Higher taxes are a very strange and indirect way of stopping something that's considered unacceptable. Suppose we made murder legal and simply taxed "hit" contracts with a very high rate. That would be crazy, right? But that seems to be our policy with cigarettes. If we're serious about stopping smoking, then we'd make it illegal, and put the tobacco companies out of business entirely.
2) Tobacco companies specifically target children, who aren't mature enough to make good choices, and then the kids get hooked on nicotine for life. So that needs to be addressed specifically. I'm amenable to protecting kids, but much less so about paternalism for adults. Again, though, I don't see tax policy as the answer here.
If you consider nicotine addiction to be a moral issue, which it might be, then there are very perverse incentives involved in taxing cigarettes, because the government is making money from something it considers immoral. I would also mention the addiction that many state governments have to lottery ticket revenue.
This is the (first) fundamental mistake of the article. The purpose of taxes is to raise funds for necessary services, as stated in steps 1 - 5. The only question is how to raise those funds fairly.
As soon as you start thinking about incentives and changing behaviors, the tax system suddenly has two purposes rather than one, and those two purposes can be at odds. Really, in a free (as in freedom) country, the government has little or no purpose in trying to guide behavior, except to prevent people from illegally harming others.
"Individual income taxes are bad because: They penalize people's initiative, hard work, savings, investing, and attempts to better themselves."
It's not a penalty, it's simply a fair rate based on ability to pay. Even under progressive taxation, you still end up better off by making more money. There would only be a "penalty" if the tax rate were 100% or somehow >100% for additional income.
The only thing that prevents people from bettering themselves is means-testing some essential service, such as health care. In other words, losing your health care or having it priced out of reach when you get a better job or start your own business. This is why we need single-payer. (And arguably government-subsidized higher education.)