Tobacco has been a mainstay of the American economy since colonial times and was even used as currency in trade with Native Americans.(1) Slavery provided the means for plantation owners to make enormous profits from the cultivation of tobacco. Until 1883, the federal tobacco excise tax accounted for one third of internal revenue collected by the United States government. Internal Revenue Service data for 1879-80 show total tobacco tax receipts of $38.9 million, out of total receipts of $116.8 million.(2) In 1921 Iowa passed the first state excise tax on tobacco. More states would pass tobacco excise taxes and would in turn become addicted to this source of revenue.
But the grassroots effort beginning in the 1970s to ban smoking in public places to protect the non-smoking population proved increasingly popular, and in the 1980s Surgeon General Dr. C. Everett Koop used his bully pulpit to make Big Tobacco public enemy number one. By the mid-1990s state attorneys general (AGs) in Mississippi, Florida, Texas, and Minnesota were emboldened to sue the tobacco industry to recoup the health costs paid by the states to care for sick smokers. Editorial cartoonists were quick to note the hypocrisy of the AGs’ indignation toward the tobacco industry after decades of the states’ dependence on cigarette excise taxes. Meanwhile, smoking is now estimated to cost the US economy between $200 billion and $300 billion in health costs and lost productivity (3), compared to the $12.5 billion in cigarette excise tax revenue (out of $3.4 trillion in total government revenue).
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