When the money is used in ways that do harm. This Brave New World approach to raising children contradicts what loving parents know about babies. Babies need love and attention. Money can't buy love and attention. Babies are best when parents find ways to shower them with love and attention.
Suggestions soon become rules.
The tax itself is also bad. The United States Constitution was designed to prevent tyranny by the majority. Prop 10 violated both of those principles. Fewer than one out of four California adults smoke. They can't win an election.