Friday, March 06, 2009

The Economic Lies Of Sin Taxes

The tobacco settlement went to tobacco cessation programs, right? Lottery taxes pay for that quality public education that Dick, Jane and Johnetta get, right? Cigarette taxes pay for the increased cost the filthy habit imposes on society, right?

Nah. Sin taxes are a hoax.

Do they do some good? Yes. Do they do harm? Yes. Do these taxes help the very people they are purported to help through social engineering by local, state and the federal government. No. Do these taxes encourage more wanton government spending which allows government to interpose itself more into our private lives? Absolutely, yes.

Most importantly, are these taxes 'healthy' form of taxation? No, they are a perfidy upon our system of government.

Bootleggers, buttleggers and lootleggers are now a common forms of crime throughout the country and is getting worse daily because of further increases in government taxation on products that the public wants.

Government gets away with it by holding the innocent, the children and the health of the nation as reasons for otherwise logical citizens to buy into their illogical and false arguments. It would be more honest for the government to put a picture of a kitty on each product and say, "Pay the tax or kitty gets it." Unfortunately, our induced entitlement society no longer seems to have a problem with a dishonest government. In fact, to get 'theirs', they have embraced it and have thrown logic and truth out of the window. As long as they get what is 'owed' them, screw the other guy.

Sin taxes do not discourage the great majorities of their target, The Center for Disease Control has issued papers and studies showing that smokers remain the same percentage as before, even increasing in certain age and sex groups. Alcohol sales have remained steady until recently when they headed up sharply. Even though most people do not view lotteries as taxes, they are indeed, and not paid by all, but only by those whose engage in playing the lottery.

As one state increases their tax, the state next door increases their tax until one state lowers their tax to increase traffic (lower taxes do increase revenue) and then the first state makes a law that prohibits the interstate importation of said product from the lower taxed state back into their state. So much for fair interstate commerce, but the real culprit is interstate competition in business. Competition, as we all know, between private commerce is our market system and a good one for balancing prices and quality making for a good value for the consumer. Anti-price gouging laws are the counterbalance. Business competition, ie, monopoly enforcement, between states and other forms of government has been and is a disaster which hurts the consumer.

State lotteries, once forbidden nationwide, have grown exponentially to 'stop' the flow of money from one state to another. When one state forms a lottery, the one next door is likely to jump on the education/lottery bandwagon because they state 'their' tax dollars are fleeing the state. First, it isn't the state's money; second, the state should not be in business (think Fannie and Freddie); and third, the state lies to their citizens by stating what the raised tax money will be spent on and then spending it elsewhere and actually just creating another bureaucracy.

Higher and higher taxes to stop people from smoking and to pay for the increased costs of smoking on society is a set of canards that Barnum would be proud of. As smokers tend to die younger, they have not only saved the government and society a pot of money, they have paid for the right to die younger in sums that would make organized crime blush which is why organized crime has jumped into these markets. They want to steal as much money as the government has only without taxation, just profits. At least they are honest about their dishonesty.

Cigarette Taxes Are Fueling Organized Crime
Last month, New York law enforcement authorities announced the arrest of Queens resident Rafea al-Nablisi for smuggling 12,000 cartons of cigarettes a week. It was not the first such arrest, and thanks to New York's latest cigarette tax hike, it will not be the last.

On April 23, less than two weeks after Mr. Nablisi's arrest was made public, Gov. David Paterson signed into law a $1.25 per-pack tax hike on top of the state's $1.50 per-pack tax. That's in addition to New York City's own $1.50 per-pack tax. Come July 1, New York City's smokers will be paying on average $9 a pack for legal cigarettes.

But if history is any guide, most cigarettes sold will actually be trucked up from Virginia, or shipped in from China, by "butt-leggers" who can make over $1 million on each tractor-trailer load of smuggled smokes. The blunt fact, which politicians of both political parties are determined to ignore, is that high cigarette taxes in New York have led to a bloody, decades-long smuggling epidemic.

While the problem first surfaced during the Great Depression, tax hikes in the early 1960s created a major profit opportunity for smugglers and kicked the epidemic into high gear. By 1967, a quarter of the cigarettes consumed in the Empire State were bootlegged. New York City's finance administrator labeled cigarette smuggling the "principal stoking facility of the engine of organized crime."

Smuggling is very profitable. My ancestors could attest to that. Smuggling has become very dangerous and violent which takes law enforcement away from protecting the general public which does not engage in smuggling. This is yet another form of hidden taxation when we are asked to be taxed more for our safety when the increased crime and violence was actually made possible by government and then encouraged as they ignore reality and further increase their stupidity and our taxes.

Sin taxes are regressive, ie they disproportionately target the poor. These taxes hurt the very segment of society which they purport to help. Love stinks. They are regressive in another way as well as children learn that smoking, drinking and gambling are stupid, ergo their parents or family members who do so must be stupid and the state smart, making sin taxes good thus we, as a society, must have more taxes paving the way for more government programs and departments they were never intended to take part in, but are supported by certain segments of society and politicians hoping to pad their nest and get re-elected.

This is the rotten dais from which lies about the economics of taxation and sin taxes are told.