Stiffed

Investors Grab Chunk of Tobacco Payouts

Due to deals with Wall Street.

Cigarette manufacturers pay U.S. states billions of dollars in reimbursement for the health-care costs of smoking, with about $100 billion paid so far since a landmark legal settlement with Big Tobacco in 1998. But a large portion of the money no longer goes to governments, but is pocketed instead by investors. About 44 percent, nearly one in every two dollars tobacco companies pay out each year, goes to the investors, according to ProPublica. The windfall results from deals that politicians and Wall Street arranged to get cash up front by trading away the tobacco income decades into the future. The payments from Big Tobacco are to go on as long as people smoke. An updated tally by ProPublica shows tobacco bondholders are due $2.6 billion of the $6 billion in this year’s Big Tobacco payouts to state and local governments.