HealthDay News — Increasing the federal income tax on cigarettes by 50 cents a pack could help reduce the federal deficit, despite the fact that people would be living longer on Medicare, study data suggests.

An additional tax could result in 1.4 million adults quitting smoking, translating into 100,000 lives saved in the first decade after implementation, researchers at the Congressional Budget Office (CBO) projected. By 2085 these numbers would increase to 3 million quitting and 200,000 lives saved. 

“The policy’s effects on the average health and longevity of the population would grow over time because of several factors — the continuing improvement in health for people who stopped smoking, the decline in the share of the population that took up smoking, and the cumulative effects of lower mortality rates,” James Baumgardner, PhD, deputy assistant director for health policy at the CBO, and colleagues wrote in New England Journal of Medicine.

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Although long-term health spending would also increase, the additional revenue generated by the tax itself and through more taxes being paid by people who would be working for a longer amount of time, “would lead to a net deficit reduction in the primary deficit in every year through 2085,” the researchers explained.

From 2013 to 2021, lower health care spending per capita would correlate with a reduction in federal outlays totaling $730 million, mostly from reduced health expenditures for Medicare and Medicaid. During the second decade, federal spending would be higher for programs such as Medicare and Social Security, and this effect would continue through the end of the analysis in 2085.

Revenues would also be affected by the policy, with additional cigarette tax receipts and higher income-tax and payroll-tax receipts from people who worked longer or were more productive; this revenue would increase over time.

Overall, increased federal revenue from all the taxes would be greater than what the federal government would spend in entitlement programs for those people, the researchers concluded.

In other tobacco news this week, a federal judge has ordered big U.S. tobacco companies to publish corrective statements about their products and associated adverse health effects.

U.S. District Judge Gladys Kessler in the District of Columbia ruled Nov. 27 that U.S. tobacco companies “must publish warnings with their products, in advertisements and on their websites saying they lied to the public about the health hazards of smoking.”

The tobacco companies involved are Altria Group’s Philip Morris subsidiary, Reynolds American’s R.J. Reynolds Tobacco Co., and Lorillard Inc.’s Lorillard Tobacco Co.

During 2011, most states “failed miserably in enacting proven policies and investing in vital prevention programs to reduce tobacco use,” the American Lung Association asserts.


  1. Baumgardner JR et al. N Engl J Med 2012; 367: 2068-2070.
  2. American Lung Association. State of Tobacco Control 2012. Accessed online: Nov. 29, 2012.