Did you know we actually subsidize tobacco? You know– that brown stuff that kills people and makes teenagers look cool? We hand over fistfulls of tax dollars to tobacco growers every year. To grow poison.
If that’s not perplexing, wrap your mind around this: we also tax people for smoking cigarettes. In 2009 we passed a federal law which brought the tax on coffin nails up to $1.01. Because cigarettes are bad for you, the government in its wisdom charges an extra dollar to encourage morons to go out and buy carrots or popcorn or something instead.
Don’t the two above goals strike you as slightly counter productive? On the one hand, we’re taxing citizens to keep valiant, hard-working tobacco farmers afloat. Yet on the other, we’re taxing the tobacco products citizens buy in order to try and convert them to chewing Nicorette gum.
In case you’re curious, while there’s definitely some financial overlap between these two mutually exclusive goals (we’ll call that gap “idiocy”), they’re not mathematically equate. The government reaps a good deal more money from tobacco taxes than it doles out in tobacco subsidies. But that overlap is nonetheless moronic.
Between the two, the subsidy bothers me more than the tax. I don’t smoke, so cigarette taxes have no effect on me. Plus, to be candid, I find most cigarette smokers contemptible. The vast majority flick their filthy cancer nubs on the ground because they’re too damned lazy to find a garbage can. I’m not so much inclined to tax them to help prolong their wretched lifespans as to punish trashy people for littering.
It’s the tobacco subsidies which boggle me. The notion behind them comes from the larger issue of agricultural subsidies in general.
There are multiple strains of logic to agricultural subsidies, but I’ve only found one with any real credibility. The (arguable) rationale behind the premise of agricultural subsidies is that we need to protect domestic farmers to ensure that our food sources aren’t reliant on foreign countries. We don’t want our chow supply dependent on Mexico (where it would actually be grown cheaper) because drug cartels could potentially disrupt the flow of double-glazed doughnuts to strategically crucial Krespy Kreme locations back home. So we tax citizens and subsidize farmers, to ensure that our food supply remains within our borders and therefore safe.
This is dubious logic. Based on recent obesity charts, it look suspiciously like Americans are intentionally bloating up in preparation for prolonged famine.
If a global food chain were disrupted for a couple of weeks, the worst case scenario is that Alabama might shed a few pounds and gain some self esteem. Also, between non-perishable goods like Twinkies and Doritos, we could probably eak through at least one nuclear winter.
Using the above national security logic, it’s fairly hard to justify subsidizing things like tobacco or cotton. In the event of a famine, we’re not likely to fall back on eating either. You should only eat a cigarette if you’re lost in the jungle and have to kill tapeworms in your lower intestines. And “cotton candy” doesn’t come from verdant southern plantations.
So the only argument left for these non-edible crops is a broader cultural one, that farming is a lifestyle.
This argument goes as follows: farmers are better people than you.
What do you do, sell dental insurance? Answer phones? Well, Leland McCormick wakes up at 4:45 to roll a tractor over seventy acres of God’s tobacco and cotton fields before dawn. So pony up a few dollars because he’s a trooper and you’re a wilting suburban dandy.
Even if you accept this premise, that the government should pick lifestyle groups and artificially support them, the scheme doesn’t work anyway. The current direct subsidy system doesn’t actually preserve the iconic “guy with pitchfork and cowboy hat” farmer we’re all rooting for.
Direct subsidies are based on tillable acreage and predicted yield, not whether your farm is family-owned, or your sons are stout, hard-working Methodists.
So a small family-run farm will get say, $15k per year, while a large agro-corporation headquartered in Manhattan will get $500,000. And do you know what they do with that $500,000? They turn around and buy the small family farm. Then that salt-of-the-earth farmer’s kids go off to the suburbs to become dog costume salesmen or hair dressers. Small farms disappear, and agro-businesses lap up your tax dollars.
There is hope.
Last week the Senate passed a Farm Bill which would accomplish astoundingly sensible reforms, like putting an end to direct subsidies, and by doing so saving $23 billion. It would strengthen crop insurance, which actually does help small farmers, by protecting them financially from droughts or plagues of locusts or whenever scarecrows get disoriented and wander off. And it would place a cap on crop insurance, so that massive agro-businesses noted supra wouldn’t make out like bandits based on their sheer size.
Until then, to their credit, tobacco farmers are overall more apt to be family farms than the fiefdoms of huge agro-businesses. So your mandatory tax contribution is indeed supporting their poison-growing lifestyle.
Which reminds me– I need to contact the National Endowments for the Arts to see if I can tax you to pay for my lifestyle, of drawing funny cartoons and writing science fiction and telling jokes on stage. The free market isn’t helping me much on that count, so maybe the government will.
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5 Comments
first off, i resent my image being used without my permission. and second, to quote CRS…
Tobacco quota buyout legislation (P.L. 108-357, Title VI, Fair and Equitable Tobacco Reform Act of 2004) eliminated federal farm price support for tobacco at the end of the 2004 crop year. Tobacco quota owners and active producers will be paid about $9.6 billion as compensation for lost rents and to aid in the transition to a free market system. The payment rate to quota owners is $7/lb. on 2002 basic quota; the payment rate to active producers is $3/lb. on 2002 effective quota. Payments will be made in equal annual installments for 10 years. Farmers wanting faster payouts can assign their quota buyout contracts to private financial institutions and receive discounted lump sum payments. Money to pay for the buyout comes from new assessments on tobacco product manufacturers and importers.
So 2 more years and then they are like anyone else
Good. Did they pull the plug on cotton subsidies as well? Because that’s just about equally economically ridiculous, though less likely to cause cancer.
“Based on recent obesity charts, it look suspiciously like Americans are intentionally bloating up in preparation for prolonged famine.”
I was actually eating a cookie while reading that phrase. Now I’m ashamed.
Truly outstanding post, though.
Don’t be ashamed of the cookie, Jeff.
Be angry about the high-fructose corn syrup inside of it which your tax dollars financed.
Of course, we’ve all read Secretary of Agriculture Tom Vilsack’s incredible (in several senses) interview with Ezra Klein in March 2011. It’s one that’s hard to forget because what Andy writes isn’t an exaggeration or parody: the moral superiority of farmers is the justification for farming subsidies.