Debate and Issues Index

draft settlement

Federal Legislation Adjustment


Under Section X of the multistate agreement, if federal legislation requires participating tobacco companies to make payments to the federal government, and some portion of that money is sent to the settling states, those payments may be offset, dollar for dollar, from the annual payments.

Concerns and Questions:

Depending on how they are implemented, this provision appears like to apply even to federal excise taxes on tobacco.

This provision is not limited to healthcare reimbursement legislation and payments. Even if it were, why should the states forfeit money from the federal government?

To the extent that this provision ensures that the federal government will not make payments to the states from tobacco company payments, what is the basis for thus infringing on federal power -- especially where it would benefit the states?

The effective bar on federal tobacco tax transfers to the states will make it much less likely in political terms that Congress would approve a tax hike.

What is the logic of this provision?

Essential Action

Tel: 202-387-8030
Fax: 202-234-5176
E-mail: action@essential.org