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It's not everyday that we get to see the hard work of free market researchers and analysts demonstrated so vividly. That's why this post is so special. Because, on the very same day that the Mackinac Center for Public Policy published this paper on the striking relationship between smuggling and cigarette taxes, we have this story about a man caught trafficking 193 untaxed cartons of cigarettes.
Like holly and ivy, taxes and smuggling tend to go hand in hand - so it's not surprising to note that this smuggling case comes from the great and broke state of New York, where they have the highest cigarette taxes in the country.
As we get ready to head into state budget crisis time in the New Year, this is a good time to remind our state legislators that cigarette tax hikes are clearly not the be-all, end-all they love to make them. The Mackinac Center study does a great job of laying out an unintended consequence of cigarette tax hikes we often don't get into here at FreedomWorks: crime. Here are a few examples:
- financing a terrorist organization;
- thefts of untaxed cigarettes, including truck hijackings;
- thefts of state tax stamps;
- counterfeiting of tax stamps;[§]
- property damage;
- counterfeiting of name-brand cigarettes, which are replaced with adulterated products, including counterfeit cigarettes from China; and
- violence against residents and police officers.
These societal costs are frequently borne by innocent people. This, together with the authors' cigarette smuggling estimates, suggests that state policymakers should reassess the value of cigarette taxes as a revenue and public health tool.
And on top of this, you still have the fact that cigarette tax hikes are extremely poor fiscal policy and they hurt small businesses.
Not that we expect these dire facts to make any difference in the coming months. When state lawmakers convene again inevitably smokers will be the first they shakedown to try to fill ever-increasing budget gaps.