“Don’t go in there,” a high school junior told my freshman daughter on the first day of school. She pointed to a bathroom door. “That’s where the kids do drugs.” 

My daughter translated when she got home that day. “It’s where kids vape, Mom,” she explained. “In class teachers told us ‘vaping isn’t allowed,’ and it’s dangerous and gross, but nobody cares. The kids just want to vape and get high.”

A young person like my daughter can get “high” in many ways with e-cigarettes. She can inhale heated and vaporized e-liquid, or vape juice, sold in a cartridge. She can vape nicotine. Or flavored nicotine (think bubble gum or fruit punch). Or, she can vape THC or illegal drugs that are added to vape juice. All these options are sold in cartridge form. What’s a concerned parent to do?

What, if anything, should government do? 

Policymakers concerned about the growth of vaping activity could ban vaping products. Or they could try to use taxes to discourage the practice. There are advantages and disadvantages to each policy option. The issue is complicated, because an e-cigarette and its products can be used in many ways with sometimes-conflicting effects. 

A congressional hearing last week highlighted a wave of recent unexplained lung-related illnesses and at least a dozen deaths that appear related to vaping. It’s a jaw-dropping development, since vaping was introduced as a way to help people quit smoking, like nicotine patches or gum.

But e-cigarettes may still be safer than traditional cigarettes for adults. And adult vapers might prefer fruity or other sweetly flavored nicotine liquid, but these flavors also are very attractive to under-age consumers. Should flavored-nicotine be banned?

Then there is the matter of revenue. A tax on vape products—set at the right level—can curb vaping while generating revenue for smoking cessation or other health programs. A banned product produces zero tax revenue.

But why tax if you can ban?

In my state of Michigan, Governor Gretchen Whitmer banned the flavored nicotine so favored by teenagers. Michigan retailers have until today to remove those products from their shelves. I asked a couple dozen friends and family members what they thought of Michigan’s ban. Unsurprisingly, as parents of teenaged children, all were in favor of it.

New York and Rhode Island have banned flavored nicotine, too. Massachusetts has gone even further. It has temporarily banned the sale of all e-cigarettes and vaping products. My husband favors that policy and would go further. “Ban it all forever,” he pronounced.

Even eternal bans have limits. 

My daughter reminded her father, “Kids will find a way to vape if they want to.” If there’s demand in a market, suppliers will find a way to meet it, legal or not. 

Some states make it remarkably easy. Michigan’s ban on flavored nicotine has a loophole. A person can buy a cartridge of nicotine-free flavored vape liquid and also buy a $5 packet of flavorless nicotine (or, CBD—legal in Michigan—for $20). Add it to the cartridge and poof! What ban?

My husband countered with the state’s age-specific ban, telling our daughter: “But you can’t go into a store and buy it, you’re too young….” Then a look of concern came over him as he asked me, “You can’t buy this online, can you?” 

Alas, anybody can—including our daughter. A few clicks on a keyboard gets her to an online vape store. All she needs is access to someone’s (like her dad’s) credit card information. Many sites do little more than ask her to click a button saying she’s 18. 

If you want less of something, tax it.

This conventional wisdom is true for traditional cigarettes. The Centers for Disease Control reports that “increasing tobacco excise taxes and implementing comprehensive smoke-free laws are two of the most effective population-level strategies to reduce tobacco use, and prevent tobacco use initiation.” Taxes on cigarettes have been especially effective at keeping kids from starting to smoke in the first place.

Michigan levies an excise tax of $2 per pack of 20 tobacco cigarettes, bringing the cost to about  $7. A vaporizer costs about $40. A 15-milliliter cartridge of vape juice—with nicotine, the equivalent of  7.5 packs of cigarettes—costs $13. But Michigan levies no excise tax on e-cigarettes or related products. Vaping is a relative bargain. Should it be?

Seventeen states and the District of Columbia tax vaping products. Half implemented the taxes this year and my TPC colleague Richard Auxier has described key challenges  raised by the levies, including complexity, choosing the right tax rate and base, and tax avoidance. 

Michigan might learn from Minnesota where, despite its 95-percent-of-wholesale-price tax, vaping has steadily increased. Maybe an even higher tax rate would stop the climb. My state could use the money from a higher rate. 

If vaping taxes are an option, a ban on products that could generate tax revenue doesn’t make much sense. A large excise tax on flavored vape fluid—with nicotine or without—for example, could deter a teenager from purchasing it, but not discourage a quit-hopeful cigarette smoker from doing so.

Michigan could go big—really big—with a new tax, and not ban.

States initially treated vaping products like other tobacco cessation devices and didn’t tax them. That was wrong. Then they learned that non-cigarette users were vaping, so they taxed vaping products like tobacco-based nicotine products. That was wrong, too. 

Vaping—irrespective of nicotine’s presence—poses different kinds of policy problems and health dangers. We’ve likely not seen the last of temporary bans on some products and the predictable legal disputes that follow. Michigan’s ban on flavored nicotine already faces a court challenge. That may be another reason to turn to a tax, but not just a percentage-of-price tax. 

Michigan could take the lead and levy an extremely high excise tax on all vaping products—one not based on a percentage of the product’s relatively low price, and not based on the presence of nicotine. That tax can’t be too high, or consumers will go elsewhere—either to the black market or across state lines. How about a tax of a $1 per milliliter of vaping liquid? At least then a 15 milliliter cartridge would no longer be a relative bargain compared to cigarettes.

Granted: I’ve never been a vaper, a smoker, a drug user, or a governor of a state with voters who dislike high taxes. But I have watched a young person describe how he feels after contracting a lung illness from vaping.

And I know that a new, extra high excise tax would cause a lot less harm. 

The Tax Hound, publishing once a month, helps make sense of tax policy for those outside the tax world by connecting tax issues to everyday concerns. Have a question or an idea? Send Renu an email.