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Considering Tobacco Taxes and Laws
by Brian S. Wise

Funny how we are so quick to express our outrage at the financial practices of companies like Enron and Worldcom, yet when the government does the same thing, we don't demand that it balance its books. Instead we sit and allow it to raise taxes again and again to mask its mistakes.

Considering Tobacco Taxes and Laws
Brian S. Wise
Saturday, 29 June 2002

Today’s local newspaper prominently features five stories on its front page. One is on the legality of forced recycling fees (a column for another time, it was decided), one on a crazy old woman found to have four dozen cats in her trailer (hell, don’t most crazy old women have four dozen cats?), one on the firefight between North and South Korean ships (oddly, the most important story, it’s below the fold), one on President Bush’s lecturing of Big Business (one is left to imagine the only-second-ever transfer of power, ala the 25th Amendment, was unimportant), and the last on this State’s cigarette taxes, which on Monday will increase from 15 ½ cents per pack to 55 cents per pack. Only one article caught and kept my attention; the one on cigarette taxes. (Because taxation is so despised here, not because of a smoking habit.) To wit:

A few months ago, Indiana (a State that, not long ago, found itself floating adrift in a two billion dollar surplus) was suddenly one billion dollars in debt; the question was, What to do? After some light duty, pretend slap-fighting, the State did as States are wont to do: lowering some property taxes, to their credit, but then raising tobacco and gambling taxes. The hometown newspaper’s article on the matter concerned those who come in from Michigan to buy their cigarettes, spending less and, often, breaking Michigan’s law concerning the number of cartons one can transport across State lines (six).

Of course, the woman who wrote this article is careful not to mention whether any customers came in to purchase over the legal limit during her visits to two local stores, but did take certain pains to note the crime was punishable by: “a maximum fine of $5,000 and up to one year of jail time.” If that stern warning didn’t dissuade you, a Michigan State officer is quoted, promising, “the police will enforce the law.” (“No, they won’t,” promises Brian S. Wise, current day columnist and long-ago tobacco store assistant manager.)

Whatever else is said about law, it works on three defining principles: 1) Government’s motivation in passing the law; in other words, is it legitimate? Are its purposes practical and useful or are they meddling and burdensome? 2) Government’s ability to enforce their new law; that is, whether the new law means enough to the State to warrant expenditures in not only dollars but manpower to enforce it, and; 3) whether or not the people believe the law is in their best interests to follow. Even if the first two conditions are logically met, it’s for naught if the citizenry refuse to follow the law, for whatever reasons, because they outnumber law enforcement exponentially.

Considering this, let’s say that, on this particular stretch of the Indiana / Michigan, where there are no fewer than six cigarette stores, three police cars sit on the Michigan side, the officers searching out these vicious, tax- evading tobacco fiends. (This is purely a hypothetical, of course; the police have better things to do.) Provided your contraband is kept out of sight (say, in your trunk), and provided you obey all applicable traffic laws (or take a back road; there are several), the odds are extraordinarily in your favor against being either pulled over or fined.

This is a perfect example of the above standards; the people – fully cognizant of the fact the State’s law is merely a money grab and burdensome, and fully aware the State doesn’t possess the ability to stop them – will go into Indiana (or onto the internet) and buy what they want as it conveniences them. As they should. Those instances where someone is stopped and fined are so unlikely, breaking the law is entirely worth the exercise.

It is granted that Indiana’s residents have it good compared to smokers in other States; New York, for one example, is set to enact an increase that harkens back to the old Soviet days: first thing Monday morning, a pack of smokes will set you back seven dollars. Really now, seven dollars? And what will either of the increases do for their respective States? Those budget debates and worries coming to an end once the new revenue begins to pour in will, inevitably, resurface again in a few years, because those fundamental budgetary mistakes responsible for the original shortfalls will continue to exist. What then? More increases on tobacco, one supposes.

Just as inevitable, someone will write to say, “Look: because smoking kills you, and because States often spend extraordinary amounts of money paying for the smoking related illnesses of its inhabitants, its in everyone’s best interests to increase the taxes to help offset the costs.” Dubious arguments; by this rationale, the Big Mac should be taxed thirty cents every time the State is in a pinch, because what, besides tobacco, has lead to more life threatening conditions than red meat? That is, if what really matters is the vehicle that leads to your disease and not the actual disease, the State should take it upon itself to tax any and all such vehicles, no?

No. But the tobacco tax is as close to a perfect tax as man can manage, because it specifically targets one group of customers, whose habit is demonized, and whose consumption is so perfectly defined the tax increases themselves cannot lose. Does it matter that the increases in question exponentially impact the poor in negative ways? Not in the least. What matters is the revenue, which all States could easily do without if they could only straighten out their own books.

Perhaps the greatest irony in modern American politics lays itself out like this: we have lately come to witness the monumental collapsing of several very large companies, where in each case stockholders were essentially ripped off; Enron, ImClone, Global Crossing, Worldcom, et cetera. Our reactions to these failures have been venomous, and rightfully so. Yet, we fail to hold Government to the exact same standards we are holding to corporations; the difference being, everyone invests in Government, generally at levels against our will, and people choose to invest in corporations. Shouldn’t we expect Government to balance its books and account for itself off of our backs? Haven’t we given enough?

Tax law is the only continuing set of American law worth breaking consciously, ladies and gentlemen, as it directly affects your standard of living. So break them as you can, whenever you can, and take back what is yours. If that means going from Michigan into Indiana for your cigarettes (as Michigan will soon be raising the tax yet again), do so, and dare the State to stop you.

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