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As Brendan noted a post or two ago, more and more states are looking to nanny-state style "sin-taxes" to fill budget holes. I want to point readers to an excellent WSJ article from the wayback machine in August. The article takes a quick look at the repercussions of cigarette taxes in states like Maryland and New Jersey - rampant black markets, hurt businesses, and none of the promised revenue:
Maryland is only the latest state to prove the folly of trying to finance government with a tax on a shrinking pool of smokers. In New York City and State, tobacco taxes have been raised so many times that the retail cost can exceed $9 a pack -- about double the national average. Few budget-savvy smokers in the Big Apple pay that tax. Patrick Fleenor, an expert on tobacco taxes at the Tax Foundation, estimates that there is "now a 75% gap between cigarette sales in the city and cigarette consumption." In other words, three out of four cigarettes are bought elsewhere or are contraband. Out-of-state purchases, tax-free Internet sales and a cigarette black market are booming.
And in addition to mounting state campaigns against all these new taxes - taxes that will hurt businesses and families and that are a gateway drug to much "harder" taxes on more and more of the population - the auto bailout drama still hasn't gone away. The Detroit Big 3 are still determined to get their payout one way or another and won't consider the inevitable, better path of bankruptcy.
In another WSJ hit, Todd Zywicki explains "Why Bankruptcy Is the Perfect Remedy for Detroit." The end sums things up well:
Those Washington politicians who repeat the mantra that "bankruptcy is not an option" probably do so because they want to use free taxpayer money to bribe Detroit into manufacturing the green cars favored by Nancy Pelosi and Harry Reid, rather than those cars American consumers want to buy. A Chapter 11 filing would remove these politicians' leverage, thus explaining their desperation to avoid a bankruptcy.
In short, Detroit and the public have little to fear from a bankruptcy filing, but much to fear from the corrupt bargain that is emerging among incumbent management, the UAW and Capitol Hill to spend our money to avoid their reality check.
And while GM fiddles, waiting to be bailed out in a bad economy that is hurting other car manufacturers as well, Toyota is already shifting their business plan to adapt.