Monday, November 26, 2012

Coming Soon: Increased Prison Terms for Black Market Cigarette Dealers

At some point taxes can get so overwhelming that the black market takes over. For a profit, mind you, for a profit.

Economist magazine reports:
THE busy interstate highway that zips through Richmond, Virginia, and up to the crowded cities of the north-east has long been a conduit for handguns bought wholesale in Virginia and sold to drug-dealers in New York. Now I-95 is siphoning northwards another form of contraband: black-market cigarettes.

Because Virginia’s tobacco tax is the second-lowest in America, gangsters buy cigarettes there in bulk and sell them at enormous profit in New York and other high-tax states. At a minimum, they pocket a big chunk of the difference between what Virginia adds in tax—30 cents a packet—and the higher rates imposed elsewhere. New York’s tax, at $4.35 a packet, is the highest in the country.

The federal Bureau of Alcohol, Tobacco, Firearms and Explosives estimates that sales of illegal cigarettes cost government—local, state and federal—nearly $10 billion a year...

The growth of the cigarette-resale racket, known to police as “smurfing”, appears tied to a growing government appetite for cash. Since 2007 at least 27 states have raised their cigarette taxes, often to erase deficits or to cover sharp increases in health-care costs. This spurs the smugglers on. In New Jersey, where a packet of cigarettes carries a tax of $2.70, about 40% of all cigarettes are smuggled in from other states, according to the New Jersey Treasury Department. Maryland, Virginia’s neighbour to the north, reported a fourfold increase in seizures of illegal cigarettes between 2010 and 2012, though one official described the haul as the tip of the iceberg.Moreover, the penalty for doing it—a maximum of five years in jail, under federal law—is considerably lighter than for selling drugs. If the smugglers were trafficking in heroin, they would face life in prison. 

Note well: Economist is an establishment mag, if there ever was one. Note the use of the words "gangster" and "racket" for those attempting to provide cigarettes at a reasonable price. What's going on here is Economist is likely launching an early seeding amongst second-hand promoters of government authoritarian ideas. The power operators want greater legal penalties for those selling non-taxed cigarettes. As the second hand dealers get "educated" about the "evils" of non-taxed cigarettes, they will soon be out with the opinion pieces calling for higher prison terms for dealers in non-taxed cigarettes.

Bottom line: Black market non-taxed cigarette dealers are on the radar of big government.

12 comments:

  1. So they are going to increase the costs of imprisoning people that are profiting where the government is not able to. I don't think I need to explain how idiotic that is, I'm sure the readers here can figure it out themselves.

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    1. OK, I'm free market, & see the obvious problems re bootlegging, whether during prohibition, or with cigarettes now.

      However, if you are going to do a macro cost-benifit analysis, reducing smoking, which jailing cigarette smugglers does, can only reduce total health care costs (private, and/or Gov't;) increase longevity, & thus increase productivity, & wealth generally.

      I'm not arguing above for political purposes, but just to point out a complete economic analysis should include all aspects.

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    2. A more complete analysis should then include costs of jailing and productivity of individuals lost while imprisoned, and the social costs of reintegration when they get out of prison.

      Not to mention increased uncertainty from the populace, not knowing if the government's really serious about protecting private property and personal freedom.

      This time it be cigarettes, who knows what they'll go after next time.

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    3. Not true. Most smokers die very rapidly after onset of symptoms. Heart disease and Alzheimer's can leave people suffering for years at very expensive treatment facilities. Cost benefit analysis should encourage everyone to smoke and die before the expensive ailments rear their heads.

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    4. None of that will matter, the federal plan's to cover healthcare will fall short. None of this will ever live up to the expectations you have been convinced of being real. Within a few short years of the healthcare plan taking full effect, it will have to be cut back due to shortfalls in revenue expectations, if it even makes it that long.

      Also the Productivity is not a directed result of reduced government cost when the tax load and the deficit load itself will not be reduced, no matter how long of a timeline you extrapolate. Inflation and Interest Rates will overcome the situation far before there are any noticeable improvements. That doesn't even take into account the newly increased prison populace.

      My analysis was complete, I just didn't think I should have to point out the numerous fallacies and flaws in a plan such as this.

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    5. Holy crap! Lose the utilitarian nonsense. We are all free and sovereign beings!!
      Light up!!! (if you want. Not Me, thanks)

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  2. Note the echo of the ATF's disgusting assertion that any sum short of the maximum possible appropriation is a "cost". All wealth belongs initially to the state, and it is only at it's discretion that we might get a share of our production

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  3. Sorry, but I seriously doubt that most of the people who are doing this are "gangsters", as the article calls them.

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    1. The gangsters are the ones with badges, guns and immunity from prosecution.

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  4. I wonder how long before we see this PSA:


    "When you buy illicit cigarettes, you're supporting terrorism."

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    1. More truthful- "by paying taxes you are supporting terrorism"

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    2. The power operators want greater cigarettes buying legal penalties for those selling non-taxed cigarettes.

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