Among other things, Michigan uses the tax to support the schools. I like your “Trojan Horse” comment, and I’ll have to read your previous posting, it’s ceratinly a concept that my argument was approaching, but never quite materialize. In short, I’ve debated the merits of “externality arguments” ad nauseum, and I’ve suggested that the State is becoming dependent on the tax revenue – that if the tax actually did what it was supposed to do (i.e. demand for cigarettes was elastic) then they’d actually suffer a decreased revenue and lack of funding for the projects that the taxes currently fund.

I enjoyed reading your post on tobacco taxes, but isn’t the biggest subsidy to tobacco growers in the form of acreage restrictions? To grow tobacco for sale, one must have an acreage allotment. This keeps the production of tobacco down and, of course, prices up. This doesn’t seem at all incompatible with reducing consumption. Direct subsidies, of course would be, but so much of our farm programs, including tobacco, is about supply restraint. It really is first-class rent seeking.