Advocating Plunder: AP on the Tobacco Tax

The American economy has always included a mix of market and political entrepreneurs — self-made men and women as well as political connivers and manipulators. And sometimes, people who have achieved success as market entrepreneurs in one period of their lives later become political entrepreneurs. But the distinction between the two is critical to make, for market entrepreneurship is a hallmark of genuine capitalism, whereas political entrepreneurship is not — it is neomercantilism. -Thomas J. DiLorenzo 

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Federal tax increases on tobacco products will take effect on April 1.

The reason for the new hikes, supposedly, is to pay for children’s health care, under the Children’s Health Insurance Program Reauthorization Act of 2009.

It’s all just another cartelization device for driving out competition while funding the federal cartel’s wars. The only ones sure to benefit from the increased plunder will be the federal-health monopoly, federal-tobacco monopoly, and the D.C. politicians whose coffers are filled by health-care and Big Tobacco lobbyists.

And The Associated Press is all too happy to assist.

On March 29, AP ran a story titled “Smokers face a hit as tobacco taxes spike.” They may as well have titled it “Advocates make airtight case for legislating morality,” or “Lobbyists demonstrate benefits of monopoly.” As usual, root-striking legal and moral arguments are omitted and replaced with a narrative-dialogue awash in fallacy and conjecture and bolstered by government statistics. None of it is corroborated or challenged.

At the bottom of the report, the editor inserted a link to a U.S. Treasury site, where a table shows the exact tax increase on each of the ten categories of tobacco products taxed by the U.S. government. The AP report highlights two of them: class A cigarettes, up from .39 to 1.01 per pack, and chewing tobacco, from 19½ to 50 cents per pound.

Now, those are huge increases, to be sure. The tax hike on a pack of smokes, a bag of chaw, a can of snuff, or a box of stogies is a whopping 158%.

But that is the smallest hike among the other tobacco products.

The tax hike on roll-your-own tobacco is 2160%, while the tax hike on on small cigars is 2653%! [1]

In opening the report, the AP editor called it the “single largest federal tobacco tax increase ever.” Why, then, would the two largest increases in history be omitted from the report?

Who knows. But, it just so happens that the makers of class A cigarettes have not been doing so well during the recession, while the roll-your-own industry has been doing very well, from manufacturers to consumers. And what do ya know! According to Wikipedia, “On January 6, 2009, Altria Group, Inc. completed the acquisition of UST Inc., the world’s leading moist smokeless tobacco [chewing tobacco, snuff] manufacturer.” Altria owns Phillip Morris USA, maker of Marlboro and many other class A cigarettes. (Good thing their taxes go up only 158%, eh? Otherwise, they’d have to compete fairly with the RYO folks, and that takes work.)

And think about it. Who could honestly and plausibly explain why someone paying less than $20 for a one-pound pouch of tobacco today will pay around $7o or more tomorrow? There simply is no good explanation for rape, even the allegedly-humanitarian financial variety.

Which is why the ”for the children” fig leaf is trotted out umpteen times, while the tobacco cartel’s biggest names are made prominent in the testimonials of smokers, who are curiously not so averse to their own plunder:

Standing outside an office building in downtown Washington last week, 29-year-old Sam Sarkhosh puffed on a Marlboro Light. His 8-year-old daughter has been pleading with him to quit, he explained, and he has set a goal to give up smoking by his 30th birthday.

“I’m trying to quit smoking, and it could help,” said Sarkhosh, an information systems specialist. “I don’t think it will stop me from buying cigarettes every now and then, but definitely not as often.” A friend who smokes Camels went out and bought four cartons in advance, he said. [Emphasis added.]

The idea here is that Average Joe will be encouraged to either quit or stock up. And when he stocks up, he usually chooses a fresh and satisfying Marlboro Light or a smooth and rich Camel. And if he quits, well, he’s doing it for the children — just like Obama & Co., allegedly.

In reality, this is just another case of politicians and their corporate cronies ”rigging the apparatus” for a predictable financial surge in their areas of industry and war-making.

And AP is running one heck of a smokescreen for them.

In the 23-paragraph report, one paragraph — the 20th! — gives a superficial and marginalized voice to opponents. There, AP laments: “Some policy analysts have questioned the wisdom” of the plunder which was meant “to finance health care for children.” [Emphasis added.]

Not one of those “policy analysts” are named or directly quoted. And no elaboration is provided to their arguments. Meanwhile, praises are sung constantly throughout the report, and not by merely some advocates, but “[m]edical groups [that] see a tax increase right in the middle of a recession as a great incentive to help persuade smokers to quit.”

For good measure, AP adds:

But smoking control advocates such as [Eric] Lindblom say tobacco taxes should be even higher. “There’s a lot of room to go after cigars and smokeless,” he said. “We are certainly hopeful that health care reform will include some more increases.”

Right. Because, as everyone — obviously — knows, the way to help an increasingly poorer economy is through an exponentially increased tax burden on private individuals and businesses, thus, among other pernicious things, virtually prohibiting entry into the market. It is precisely through this illicit cartelization via protectionism, disguised as humanitarian action, that politicians and their coffer-filling cronies have historically enriched themselves off the backs of private citizens.

Only through the government’s monopoly on the use of force, and it’s thus looted largess, can a monopoly survive in an otherwise competitive and free-entry market. AP should at least recognize the moral and historical arguments against government intervention. Instead, under the guise of an argument against the tax hikes, the editor makes an inference to the necessity for even more federal control over personal decisions, noting that ”[t]he tobacco industry is also warning that the steep increase will lead to tax evasion through old-fashioned smuggling or by Internet purchase from abroad.”

In other words, a black market will thrive and expand, as it has with the war on drugs, and as it did during the alcohol prohibition of the ’20s. And, as always, violent criminals will flourish while law-abiding citizens will suffer exclusively. And instead of repealing the unconstitutional and self-destructive policies, there will likely be a higher tariff and other protectionist tyranny and malfeasance — thanks to AP editorial management, and the government officials and lobbying ”experts” with whom they agree, for ignoring the U.S. Constitution and the tragic lessons of history.

The sickest irony here is that the very same measures intended to provide more health-care access to children will surely provide them with more access to tobacco products. Meanwhile, those “health-care” professionals and other lobbyists will be rolling in the dough as their subsidies increase off tax-paying adults, while benefiting from the job security resulting from the worsening health of a new crop of “tax-evading” child smokers.

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1. Moreover, rolling cigarettes requires papers or tubes; each will go up by 158%. So, roll-your-own suppliers and consumers are looted twice.