Cigar Tax - PeachParts Mercedes-Benz Forum

Dee8go · #1 07-30-2007, 01:33 PM

I read an article somewhere on the Internet today (can't find it now, of course) about the cigar tax Congress is getting ready to pass. Am I the only one here who is incensed by this?

Our congressmen will probably not be subject to this tax, of course. Besides, unlike we voters, THEY can leagally visit Cuba and bring back Cuban rum, cigars, and whatever else the Cubans make and sell.

dynalow · #2 07-30-2007, 02:15 PM

Emptying the Humidor
Congressmen push a cigar tax, proving they've learned nothing from history.

BY DAVID HOGBERG
Wednesday, July 25, 2007 12:01 a.m. EDT

I've often wondered exactly how severe is Congress's case of historical amnesia. In late 2005 we found out that many members of Congress clearly couldn't remember anything previous to 1980, as witnessed by their call for 1970s-type price controls on oil. But last week we learned that Congress's historical amnesia is much worse than anyone feared. Clearly it extends back to as recently as the early 1990s.

Nineteen-ninety was the dreadful year in which President George H.W. Bush abandoned his "Read my lips, no new taxes" pledge to cut a deal with congressional Democrats to increase taxes. Among the new taxes created by that deal was an excise tax on "luxury items." This "luxury tax" was imposed on goods such as jewelry, furs and yachts. It was subsequently repealed in 1993 after proving to be nothing short of an economic and policy disaster.

Last week members of the Senate Finance Committee including chairman Max Baucus (D., Mont.), Jay Rockefeller (D., W.Va.), Chuck Grassley (R., Iowa), and Orrin Hatch (R., Utah) cut a deal to increase the funding for the State Children's Health Insurance Program to the tune of $35 billion over five years. To generate this money, the deal imposes a new luxury tax on cigars.
To understand why the luxury tax on cigars is a terrible idea, we need to revisit the history of the luxury tax of the early 1990s--a history that congressional members' severe amnesia is preventing them from remembering. Class-warfare thinking infected the luxury tax of 1990. Think of the multimillionaire whose wife was wearing a gold-and-diamond necklace and a fur coat. They were getting into their limousine to drive to their 100-foot yacht on which they would spend their weekend. How was it possibly fair that the rich spend so lavishly on such unnecessary items when Joe Six-Pack struggled just to put food on the table? Imposing a luxury tax on those items was a proper way to even things out, to make the rich pay their "fair share" to fund the government programs that helped Joe Six-Pack.

Unfortunately, Congress never bothered to consider that increasing the tax on these items, and thereby increasing the price of those items, might change the behavior of said rich people. (Indeed, many members of Congress stubbornly refuse ever to acknowledge that taxes ever affect behavior.) But said rich people had other ideas. If the price of jewelry, furs and yachts suddenly increased, then maybe purchasing a winter home in Florida seemed like a much better deal. Or maybe those rich people would take a shopping trip to other parts of the world, where the prices of jewelry, furs and yachts were now much more competitive thanks to the U.S. Congress.

And if members of Congress never considered that the luxury tax would discourage rich people from buying luxury items in the U.S., then they surely never considered that such an effect might not be so good for the Joe Six-Packs who worked in the industries producing luxury items. A Joint Economic Committee study later found that 330 jobs in the jewelry industry and 7,600 jobs in the yacht industry were lost thanks to the luxury tax. Perhaps the greatest irony was that in 1991 the federal government paid out over $7 million more in unemployment benefits to those workers than it collected in luxury tax revenues.

Fast forward to 2007. The current tax on cigars is a maximum 4.8 cents a cigar. The new proposed luxury tax on cigars is 53.13%, up to a maximum tax of $10 a cigar. Thus, if you like cigars worth $20, you'd be facing a staggering tax increase of 20,733%. By comparison, the luxury tax of 1990 was an increase of only 10%.
No doubt supporters of this tax will claim that it will have little impact on cigar purchases since cigars contain nicotine, which is addictive. But nicotine has minimal impact if the tobacco smoke isn't inhaled, and in my experience most cigar smokers do not inhale. Thus, many cigar smokers should have little trouble quitting if they find the luxury tax has increased the price of cigars beyond what they want to pay. Others will continue smoking cigars, but will reduce their costs by smoking fewer of them. And, of course, some cigar smokers will avoid the tax by buying cigars abroad, a purchase made all the easier by something that didn't exist in 1990, the Internet. Why, here's a page that lists 52 Web sites for buying cigars in Europe. In short, this new luxury tax will cause a precipitous decline in consumption of American-produced cigars.

Of course, about as many people are going to shed tears for the person buying a $20 cigar as did for the rich person buying a yacht. But they might feel a lot of sympathy for the Joe Six-Packs who work in the cigar industry. Exact numbers about how many people work in the cigar industry today are hard to come by since the federal government stopped collecting data on cigar producers a few years ago. In 1999, the Census Bureau reported that 3,845 people worked in the cigar industry. Norm Sharp, president of the Cigar Association of America, guesstimates that the industry now employs between 7,500 and 10,000 workers, a plausible number given the growth in the industry in recent years. Whatever the number, what is clear is thousands of cigar employees face a fate similar to workers in the yacht and jewelry industries in 1990.

That is what Congress's severe case of historical amnesia yields--an astronomical tax increase leading to workers losing their jobs. But try to look at the bright side. If those cigar workers lose their jobs, the resulting decline in their incomes will mean that their kids will have no trouble qualifying for the State Children's Health Insurance Program.

David Hogberg, a Washington writer, writes the Health Hog blog.

LUVMBDiesels · #3 07-30-2007, 02:20 PM

While the Congress can go down there for "humanitarian reasons" we can't.

Reminds me of a story my wife tells. She was in the State Department stationed in Dushambey, Tajikistan. Congressmen would come over to buy rugs and other things. One Congressional wife bought so much stuff they could not fit it all in the Air Force jet they had come on. The rest of the stuff was put in the diplomatic pouch (think shipping container) and sent back with no customs duties or inspections.

As far ad the tax goes, I AM Joe Sixpack, but I like cigars. The idea of soaking the rich to pay for the poor almost destroyed the UK back in the '60s and '70s

Now that the Democrats are back in power, they cannot wait to bring back huge spending programs. As far as a tax on cigars goes, it will be a done deal, nobody ever goes against the so called "sin taxes" Guess I should buy a really large humidor and stock up now.

Whenever I go out of the country I always try to bring back some Cuban cigars. I have had much luck coming back from Grand Bahama...

SwampYankee · #4 07-30-2007, 02:29 PM

Quote:

Originally Posted by Dee8go

I read an article somewhere on the Internet today (can't find it now, of course) about the cigar tax Congress is getting ready to pass. Am I the only one here who is incensed by this?

Our congressmen will probably not be subject to this tax, of course.

Of course not. They can't be expected to live by the same laws and benefits that us commoners do.

If it exists, they'll figure out a way to tax it.

Mistress · #5 07-30-2007, 02:35 PM

those insensitive basta^%s!. Life liberty and the pursuit to enjoy a good cigar our rights going up in smoke! Line em all up and whip the tar out of em!

Dee8go · #6 07-30-2007, 02:40 PM

Yeah, that's the article I was referring to earlier. They even quoted the guys from Curtis Draper, the store I occassionally patronize downtown. The District has already outlawed smoking in most places in Washington. There are some jurisdictions in the Washington suburbs that have attempted legislation to make it illegal to smoke outside.

I don't know what's come over the people in this country.

SwampYankee · #7 07-30-2007, 02:47 PM

Quote:

Originally Posted by Mistress

those insensitive basta^%s!. Life liberty and the pursuit to enjoy a good cigar our rights going up in smoke! Line em all up and whip the tar out of em!

There are some things worth getting all riled up about.

Mistress · #8 07-30-2007, 02:55 PM

Nothing beats sucking face with a man whose just finished smoking a cigar and had a shot of scotch...you know the simple things in life.

Dee8go · #9 07-30-2007, 02:57 PM

All over the world men are lighting up cigars and pouring scotch at this very moment!

Mistress · #10 07-30-2007, 03:00 PM

All I can smell in my office right now is burned pop corn- jez what a smell! My co-workers have banned me from ever making pop corn again...

SwampYankee · #11 07-30-2007, 03:07 PM

Quote:

Originally Posted by Dee8go

Yeah, that's the article I was referring to earlier. They even quoted the guys from Curtis Draper, the store I occassionally patronize downtown. The District has already outlawed smoking in most places in Washington. There are some jurisdictions in the Washington suburbs that have attempted legislation to make it illegal to smoke outside.

I don't know what's come over the people in this country.

Enough of them want to live in a nanny-state and/or elect politicians who want to be nannies and the rest of us are reaping the "benefits".

toomany MBZ · #12 07-30-2007, 03:24 PM

I'm stocking up! Will have to check foreign sites for 'em now. Cameras going up in public places, if you're not doing anything illegal, you have nothing to worry about. What's next, cameras in the bedroom?