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A Tax is a Tax

By Tom Morgan


Here is a money-making idea for you. Rent a van. Drive to Missouri. Load the van with cigarettes. Drive back and sell them in New York. Sell them for $1 less per pack than the normal price in the state.

Voila! If you do this with 10,000 packs of smokes, you pocket more than $30,000.
Believe me, you can pack 10,000 packs of ciggybutts into a van. More. And you should have little trouble finding places to dump them. That’s because New York is an open black market for cigarettes from other states.

Our state slaps a $4.35 tax on each pack. Highest of all states, no surprise. Missouri taxes cigarettes 17 cents per pack. This is a hustler’s dream. Drive to Missouri and back to New York, jackpot!

A report out this week tells us our hustlers provide nearly 60 percent of the smokes sold in this state. They haul in smokes from various states where taxes on them are low. New York misses out on the cigarette taxes on these smokes. It foregoes the income tax on the smugglers. (You don’t think the smugglers declare this income now, do you?) 

New York has the highest tax on cigarettes. Always a leader is our state. Market theory predicts we should then have the highest rate of smuggled cigarettes. And we do. Students of economics, please note.

Our legislators should also note: When you raise taxes to unreasonable levels, people find more ways to avoid paying. Will the lawmakers learn? Will they lower taxes, in order to collect more? Nah. They will likely call for more policing. And more punishment for black marketers. And they will call for Missouri to raise its taxes.

Our state lawmakers have raised our total taxes and fees to unreasonable limits. Along with total red tape. (Red tape and taxes slow our economic activity.) We find ways to avoid paying.

How? Let me count the ways. We hide income. We smoke smuggled cigarettes. We resort to countless under-the-table activities. We pad expenses. The higher the taxes, the more of this we do. And every year many thousands of us take a big step to avoid taxes and regulations. We leave. For Florida or Texas.

Meanwhile, our lawmakers search for ways to tax us more. They sneak in little fees, hoping we won’t notice. They raise taxes on small segments of the economy. Who cares if dog groomers have to pay an extra $100 a year for their licenses? They lift tolls on the NYS Thruway and bridges. They slap another few bucks onto taxes at airports and hotels.

Who looks at that on the bill? And whom do you complain to about it? They stick more taxes on oil and gas and booze. They figure you and I won’t notice.

To me, all this camouflage and sneakiness is stupid. Because a tax is a tax is a tax. You can pretty it up. You can put lipstick on it. You can sneak it in. It is still a tax. On the economy. On economic activity. Taxes slow economic activity. Period. To think otherwise is to enjoy a fairy tale.

Washington lawmakers love fairy tales on a grander scale. Obamacare, for instance, is packed with new taxes. Loaded. Most of them hidden from your view. It is a fairy tale to believe you and others will not react. You may not see the taxes hidden throughout Obamacare. You will simply see the bill and groan.

Beyond that, the economy will whimper. It has to. It has been whacked with tons of new taxes and red tape. It has to take on these new burdens. It is like a horse when we load it with an extra 50 pounds. It will move more slowly.

The root of the problem is what politicians and economists see. That is, what they see when they look at taxes. The economist sees a burden. The politician sees an opportunity for more money to come in. To pay for his spending. I heard a politician say, “There’s always more money out there. If we need more, we’ve got a hundred ways to get it.”

’Tis true. But in the getting, sometimes smoke gets in their eyes. As it has with cigarette taxes in this state. They should re-name our cigarette tax “The New York State Smuggler Support Act.”

From in Morgan.

Tom Morgan writes about political, financial, and other subjects from his home near Oneonta, in addition to his radio shows and new TV show. For more information about him, visit his website at

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