Tobacco Documents Online

JUN 10 '93 12:36PM . June 3, 1993 President Bill Clinton The White House Washington, D.C. 20500 Dear President Clinton: As a fellow Democrat who fully supports your goals of increasing employment opportunities for all Americans and growing our national economy, I am writing to ask that you resist those counselors who propose drastically increasing the federall excise tax on cigarettes as a means of financing either health care reform or deficit reduction. A sharp increase in such a regressive and economically harmful tax would burden disproportionately the poor and middle class and ~ could cost hundreds of thousands of jobs, not only in the tobacco industry, but in related industries such as trucking, retail, packaging and agricultural machinery and supplies. Nationwide, more than 680,000 people work directly for the tobacco industxy, and another 1,600,000 jobs are created indirectly by the industry through expenditures. In a recent study, Price Waterhouse accounting firm estimated that as many as 388,000 of those jobs could be lost if the cigarette excise tax is increasedd by $1.00 per carton. In Alabama, where tobacco is not grown, more than 32,000 jobs are nonetheless dependent on the vitality of the tobacco sector. An increase of $1.00 in the federal cigarette tax could lead to a loss of more than 5,000 of these jobs. The economic recovery is fragile, as you know, and the effect of tens of thousands of American workers suddenly on the employment line could derail it completely. ~ In addition to the strong economic arguments against a cigarette tax increase, I question the fairness of singling out one P.9

JUN 10 ,% 12~37PM ~ group of consumers and forcing them to pay for government services that are the responsibility of all citizens. I know you are committed to making the tax system more progressive and equitable. Cigarette taxes are the most regressive taxes imposed, as they take a much higher percentage from the incomes of poor and lower-income individuals than they do from the more affluent. Ultimately, cigarette taxes are not even a very effident or reliable source of revenue for programs as important as health care or serious deficit reduction. Revenue from cigarette taxes is tied directly to a product whose sales are declining steadily year after year. A sharp increase will only hasten that decline, and reduce revenues even further. I hope you will take the above considerations into account when debating the many revenue-raising options available for both health care reform and deficit reduction In the days and week ahead. Thanks for listening to my concerns, and please accept my good wishes for your continued success. I* Sincerely yours, James E. Folsom, Jr. P.10