Obama calls for cigarette tax hike of 94 cents a pack

President's Obama's call for a 94-cent-a-pack hike on federal cigarette taxes to fund early childhood education programs is controversial. Anti-smoking groups applaud the proposal, but some tax experts and tobacco companies are against it.

The biggest argument against the tax is that it will fund early childhood education on the backs of the poor. Not only is the tax not progressive - it does not go up the more money one makes -- but a higher percent of smokers are middle or low income.

The median household income for a smoker in 2011 was $27,700 compared to $45,761 for nonsmokers, according to Reynolds American (RAI, Fortune 500), a cigarette maker which is, unsurprisingly, against the tax.

Nearly half of all smokers had a household income of less than $25,000 a year. Meanwhile, under 15% of smokers had a household income over $75,000.

"The idea of increasing taxes on low- to middle-income Americans at this time is ludicrous," Bryan Hatchell, a spokesman for Reynolds American, said in a statement. "The effect of the payroll tax increase this year, along with higher gas and food prices, have hit hard millions of Americans who are simply trying to keep their heads above water financially." Read more >>