Tax Impact of SCHIP Expansion

Last week I pointed out that Governor Rendell’s call for increased federal funding of SCHIP was because by passing “Cover All Kids”, the General Assembly created a program which is dependant on increased federal funding.

No here’s even worse news – according to a Tax Foundation report an increase in federal SCHIP funding would cost PA residents more than a state tax increase. A federal cigarette tax to fund SCHIP expansion, proposed by Sen. Gordon Smith, would cost the average Pennsylvania household $404 in higher taxes, but PA would get only $297 in SCHIP funding per household. In other words, Governor Rendell is lobbying for a tax increase for PA families, where one-fourth of the tax would go to other states.

But, it’s for the kids.