Now the House is batting about a 7% state sales tax, according to the Globe.
In my last entry, I stated that the sales tax is a tax of least resistance. Here is a more in depth reason why it is, and why I prefer it over all other taxes.
You can avoid paying gas taxes by taking public transportation. Having ridden the T for over 25 years, I can tell you that taking the T can be pretty convenient. If you work in Downtown Boston, the trip from Hyde Park to South Station is about 14 minutes. The travel time via car is 35 minutes. If I-95 had been built through Hyde Park, the trip to Downtown Boston would take about 7 minutes total - a 50% reduction in time.
I commute to Watertown, which from Hyde Park is a 15 mile journey. I now have to factor in a commuter rail ride, a Red Line ride, and a trackless trolley ride. The best time I have commuted from Hyde Park to Watertown is 42 minutes. With MBTA delays, crowded buses, traffic and the like, my commute ranges from 1 hour to 1-1/2 hours, all for that 15 miles.
By car, the distance is about 10 miles, and the travel time is about 25-30 minutes. On a 20 mile per gallon gas tank and gas at $2.00 per gallon, my one-way cost is $1.00. If the gas tax is hiked 20 cents, my cost goes up to $1.10. If I paid everything with cash - no CharlieCard discount - my cost would be $7.75 one way, based on a $4.25 commuter rail fare, $2.00 subway fare, and a $1.50 bus ride. So to avoid a 19-25 cent per gallon gas tax, instead of paying $2-2.20 a day, I would now be forking over at least $10 a day just to make that 15 mile journey, up to $15.50.
The per-day costs do go down considerably if you do buy a monthly pass. For example, a $59 LinkPass would cost you $2.95 for each of the 20 days you use it, or $2 a day if you use it all 30 days - a savings of $3 a day. A $135 Zone 1 pass would cost $6.75 a day per 20 days or $4.50 for 30 days. For the most expensive pass - Zone 8 at $250 - 20 days would be $12.50 a day and 30 days would be $8.33 a day.
The basic point is this: for all that effort to "get cars off the road" due to a hike in the gas tax, people will now pay much more to ride the T to avoid the gas tax if they pay cash and don't have a monthly pass. That means people who can't afford a monthly pass - read: the poor - will end up paying more to ride the T - sending them to their cars for a cheaper, quicker ride. For all that effort to get cars off the road due to a higher gas tax, more people will avoid taking the T because it is prohibitively expensive because they can't afford the passes, and end up driving anyway. Pretty much a zero sum game.
The sales tax, however, cannot be avoided. Everyone - rich, poor, middle class - cannot wriggle out of paying a sales tax at the cash register, and only under certain circumstances, such as food and clothing. A person paying $200 for an iPod pays $10 in sales tax now. If the 7% sales tax goes through, they will now pay $14 in tax - an extra $4 or 40%. If you buy a laptop for $1,000, you would pay $50 now, but $70 if the tax passes. You can still head to New Hampshire and buy your goodies tax-free, but if you're planning to eat at the food court, New Hampshire has an 8% "prepared meals" tax, which carries a 60% premium over our current meals tax of 5%.
A higher sales tax also takes money from people who pay very little in income taxes - either those who don't earn enough and get tax credits, or those who participate in dubious activities and have their monies set up to avoid a huge tax bite - like offshore bank accounts, money paid "under the table" and the like. If you can buy a $60,000 Corvette on your gains - illicit or not - you can fork over $4,200 in sales tax to the state. If you can buy a $3 million home in a gated community, there's no reason to shell out $21,000 to the Commonwealth.
There are a lot of people who think they are entitled to everything without paying a single penny, or that the state can vacuum all the money out of our pockets through nuisance taxes. If the state is absolutely serious about getting money into our coffers to remain solvent and to avoid cuts in service, it has to take that risk of angering the public. The public must participate one way or another - either by begrudgingly paying more in sales tax, or flipping the switch for the opponent of those who voted for the sales tax, gas tax, or any type of tax.
The passive-aggressive approach hasn't and won't work.
4/18/2009
The tax of least resistance
The Boston Herald proffers the 1 cent hike in the sales tax, which is gaining a much closer by look by the Legislature than all the seizure and social engineering taxes that are being bandied about, will kill the economy, "hit the poor where they can least afford it" (when people say that, it reminds me of those noisemakers little kids wing around their heads, and it sounds just as obnoxious), and send our Commonwealth into a death spiral.
This is one instance where I strongly disagree with the Herald from its editorial point of view.
Of all the taxes we pay, a sales tax is the tax of least resistance. You don't need to fill out forms and send them in by April 15. It shows up on your receipt when you pay for things. With the exception of New Hampshire, our sales tax at 5% is lower than Rhode Island's 7%, Connecticut and Vermont's 6%, and is at par with Maine's at 5%.
I believe, though, that a 6% tax the Commonwealth is proposing is not enough. If you really want to bring in the big money - even at hue and cry of critics - the sales tax and the income tax should be combined into a state sales tax of 12.5% - our current 5% sales tax, plus current income tax of 5.3%, plus an extra 2.2%. We will succeed California in having the have the highest sales tax in the nation, but we will also join the ranks of states with no income tax - like New Hampshire. The state income tax would then be eliminated - so in effect, it'll be a victory - if late and backdoor - for Question 1 if the 12.5% sales tax ever came to effect.
Critics, like the Boston Herald and community groups, will complain that the state sales tax hike will hurt the poor the most, as it's a regressive tax, and that this sales tax hike will kill business, introduce layoffs, and accelerate middle class flight. It will also prove a goldmine to New Hampshire, who has no state sales tax or income tax.
With the new sales tax of 12.5% and the subsequent elimination of the income tax, the monies taken out on every paycheck in MA income tax weekly or biweekly will actually give people extra money to spend or invest. People can take that money and put it into their 401(k)'s if they like, but the tradeoff is that when they buy something, they will pay those taxes at the cash register, daily and automatically. Massachusetts will become more attractive to business and production and attract more workers as there is no income tax to consider. There will still be exemptions for food and clothing - including snacks and beverages.
The amount of money brought in If a 6% sales tax brings in an extra $750 million a year, a 12.5% sales tax will bring in $5.625 billion - a healthy amount of money. The 12.5% tax can help retire the MBTA's long-standing debt and breathe new life into the system, bringing it out of its urban decay and into the 21st century.
Everyone praises New Hampshire for having no sales and income tax, but they are not completely tax-free. New Hampshire has an 8% prepared foods and meals tax. Consider that when you save $10 on a $200 iPod, buying a $10 meal at the food court will cost you 80 cents in tax in New Hampshire versus 50 cents here - a 60% difference! Property taxes in New Hampshire are also high, second only to New Jersey as the highest in the nation. So while people would high-tail it to get their sales tax free goods, eating and living there is just as cost-prohibitive.
Massachusetts has proven itself to be an innovator in many things, so why not put this consumption tax to the test? Like same-sex marriage and mandatory health care, Massachusetts has become a place where "what ifs" that were never thought about came true, even though they are imperfect. Again, the 12.5% sales tax will be high and there will be a lot of complaints from many people. This new, all-inclusive sales tax can be an experiment for other states to see if a consumption tax really works, and if it does, set aside their income taxes. If it doesn't bring in the money it's intended to bring in, then the income tax can return at its old rate.
I admit I hate paying taxes, especially high ones. Personally, I can deal with a 6% sales tax. It is a hike of 100 basis points (a basis point is 1 hundredth of one percent), or (as the Herald correctly puts it) 20% more than the 5% sales tax we pay now, doing so at the cash register will be much easier than shoving down severe cuts in MBTA service and the 19 cent gas tax down people's throats.
A side note: Since the Lottery is a voluntary tax, what should also happen is that the Commonwealth should drop Lottery payouts from 69-85% - the most generous return to players in the nation - to a uniform 50-55% payout on all tickets. (This can easily be done by reducing the money pool to pay high-tier winning tickets without changing the money pool of low tier tickets. A better explanation of what I'm taking about is that is here.) Lottery players will cry, "they took out all the big winners!" but it will save the state a lot of money that can be used for other programs. Also, cutting down the grand prizes will also help - it's nice to pay $10 for the privilege of winning $2.5-$5 million, but many other states have prizes for $100,000-$250,000 for the same privilege - and it's paid out all at once.
This is one instance where I strongly disagree with the Herald from its editorial point of view.
Of all the taxes we pay, a sales tax is the tax of least resistance. You don't need to fill out forms and send them in by April 15. It shows up on your receipt when you pay for things. With the exception of New Hampshire, our sales tax at 5% is lower than Rhode Island's 7%, Connecticut and Vermont's 6%, and is at par with Maine's at 5%.
I believe, though, that a 6% tax the Commonwealth is proposing is not enough. If you really want to bring in the big money - even at hue and cry of critics - the sales tax and the income tax should be combined into a state sales tax of 12.5% - our current 5% sales tax, plus current income tax of 5.3%, plus an extra 2.2%. We will succeed California in having the have the highest sales tax in the nation, but we will also join the ranks of states with no income tax - like New Hampshire. The state income tax would then be eliminated - so in effect, it'll be a victory - if late and backdoor - for Question 1 if the 12.5% sales tax ever came to effect.
Critics, like the Boston Herald and community groups, will complain that the state sales tax hike will hurt the poor the most, as it's a regressive tax, and that this sales tax hike will kill business, introduce layoffs, and accelerate middle class flight. It will also prove a goldmine to New Hampshire, who has no state sales tax or income tax.
With the new sales tax of 12.5% and the subsequent elimination of the income tax, the monies taken out on every paycheck in MA income tax weekly or biweekly will actually give people extra money to spend or invest. People can take that money and put it into their 401(k)'s if they like, but the tradeoff is that when they buy something, they will pay those taxes at the cash register, daily and automatically. Massachusetts will become more attractive to business and production and attract more workers as there is no income tax to consider. There will still be exemptions for food and clothing - including snacks and beverages.
The amount of money brought in If a 6% sales tax brings in an extra $750 million a year, a 12.5% sales tax will bring in $5.625 billion - a healthy amount of money. The 12.5% tax can help retire the MBTA's long-standing debt and breathe new life into the system, bringing it out of its urban decay and into the 21st century.
Everyone praises New Hampshire for having no sales and income tax, but they are not completely tax-free. New Hampshire has an 8% prepared foods and meals tax. Consider that when you save $10 on a $200 iPod, buying a $10 meal at the food court will cost you 80 cents in tax in New Hampshire versus 50 cents here - a 60% difference! Property taxes in New Hampshire are also high, second only to New Jersey as the highest in the nation. So while people would high-tail it to get their sales tax free goods, eating and living there is just as cost-prohibitive.
Massachusetts has proven itself to be an innovator in many things, so why not put this consumption tax to the test? Like same-sex marriage and mandatory health care, Massachusetts has become a place where "what ifs" that were never thought about came true, even though they are imperfect. Again, the 12.5% sales tax will be high and there will be a lot of complaints from many people. This new, all-inclusive sales tax can be an experiment for other states to see if a consumption tax really works, and if it does, set aside their income taxes. If it doesn't bring in the money it's intended to bring in, then the income tax can return at its old rate.
I admit I hate paying taxes, especially high ones. Personally, I can deal with a 6% sales tax. It is a hike of 100 basis points (a basis point is 1 hundredth of one percent), or (as the Herald correctly puts it) 20% more than the 5% sales tax we pay now, doing so at the cash register will be much easier than shoving down severe cuts in MBTA service and the 19 cent gas tax down people's throats.
A side note: Since the Lottery is a voluntary tax, what should also happen is that the Commonwealth should drop Lottery payouts from 69-85% - the most generous return to players in the nation - to a uniform 50-55% payout on all tickets. (This can easily be done by reducing the money pool to pay high-tier winning tickets without changing the money pool of low tier tickets. A better explanation of what I'm taking about is that is here.) Lottery players will cry, "they took out all the big winners!" but it will save the state a lot of money that can be used for other programs. Also, cutting down the grand prizes will also help - it's nice to pay $10 for the privilege of winning $2.5-$5 million, but many other states have prizes for $100,000-$250,000 for the same privilege - and it's paid out all at once.
4/15/2009
For Kate Jackson (no waaahmbulance required)
Kate Jackson, late of the Pointy Universe, is going through a little bit of trouble in her next phase of cancer treatment.
Namely, the blues have come to the Pointy Universe. Those days where you finally chuck your clogs and yell out a nice, hearty, cleansing FUCK to the air and the people around you, and then collapse to the ground in sobs.
You sometimes don't know what to say to a cancer patient, even if they're a cancer survivor. My father didn't survive, yet he managed to live every single moment until his final days. He never said, "give up your time to take care of me. I'm terminal, so feel sorry for me." He joked and looked at his coming passing as a gift, a relief, a normal process in life. Even though it had to come at 63 years of age, he went through it like a trouper.
The great thing to experience is talking to a long-term cancer survivor - or one who had stage I or II cancers (even stage III) and haven't had a problem for years. I know of one woman who is on my team at work who went through that hell of chemo and radiation and finally returned to work, albeit on a reduced 32 hours per week schedule. Another woman on another team came in with blonde hair one day and brunette hair the next. Still another wore a bandanna. And they come in with the energy of teenagers.
It's also OK to feel guilty, anxious, scared - biting your lip and having someone say, "I like your lip color" and then showing up at the ER for stitches. It's a normal process to shut the door and have "chemo blues" (replete with shaking sobs and tears running down your face) versus "chemo brain" (where you wear two different colors of knee highs AND shoes and somehow Glamour magazine puts the black bar of shame over your face, forever branding you a fashion Don't.)
When it's over and your hair has grown back to flowing hair, you'll look back and say, "Man, those blues were so yesterday" and redeem yourself as a fashion "do" with a killer dress and killer heels.
(Aside: Be kind to your hubby and your kids. They're rooting for you.)
Namely, the blues have come to the Pointy Universe. Those days where you finally chuck your clogs and yell out a nice, hearty, cleansing FUCK to the air and the people around you, and then collapse to the ground in sobs.
You sometimes don't know what to say to a cancer patient, even if they're a cancer survivor. My father didn't survive, yet he managed to live every single moment until his final days. He never said, "give up your time to take care of me. I'm terminal, so feel sorry for me." He joked and looked at his coming passing as a gift, a relief, a normal process in life. Even though it had to come at 63 years of age, he went through it like a trouper.
The great thing to experience is talking to a long-term cancer survivor - or one who had stage I or II cancers (even stage III) and haven't had a problem for years. I know of one woman who is on my team at work who went through that hell of chemo and radiation and finally returned to work, albeit on a reduced 32 hours per week schedule. Another woman on another team came in with blonde hair one day and brunette hair the next. Still another wore a bandanna. And they come in with the energy of teenagers.
It's also OK to feel guilty, anxious, scared - biting your lip and having someone say, "I like your lip color" and then showing up at the ER for stitches. It's a normal process to shut the door and have "chemo blues" (replete with shaking sobs and tears running down your face) versus "chemo brain" (where you wear two different colors of knee highs AND shoes and somehow Glamour magazine puts the black bar of shame over your face, forever branding you a fashion Don't.)
When it's over and your hair has grown back to flowing hair, you'll look back and say, "Man, those blues were so yesterday" and redeem yourself as a fashion "do" with a killer dress and killer heels.
(Aside: Be kind to your hubby and your kids. They're rooting for you.)
4/13/2009
Why snack taxes don't work, Exhibit #2,384
Going into the L'il Peach (now Tedeschi's) to buy a newspaper for the train/bus rides into Watertown, I literally have to go around groups of kids waiting to go into the Rogers. If I'm lucky, I'm able to purchase my paper (and a lottery ticket or two) before they can slam all of their sugar-laden junk onto the counter.
Here is my bit of friendly advice to Ray Considine, who is the head of the Medical Foundation in Boston. A lot of those kids come to Hyde Park from other parts of the city - mainly the inner city, like Roxbury and Dorchester. Their families likely cannot afford organic/vegan/super healthy things to begin with, so the kids don't get a healthy, nourishing breakfast. So they either (a) wait until they get into school, where the breakfast they serve is so bad even the rats refuse to eat it, or (b) they purchase quick cheap energy, like L'il Hugs, Doritos, and Little Debbies. Not many of them would be patient enough to buy a banana or buy a little cup of Milk and Cinnamon Toast Crunch.
Unless you want a full-bore black market on junk food - to which many kids will gladly profit from and mark up the price to willing demand - forget the snack tax. It's a tax that will not fund health programs or anything remotely resembling health. (Notice I'm using the word "health" and not the diaphanously ambiguous and Orwellian "wellness.") They will be boomerang taxes, going from the poor to the government to fill their rainy day fund.
"But it will only add up to pennies!" you proclaim.
Horse hockey. For every dollar these kids spend, it's 5 pennies to the state. Five percent sales tax. Add that to a $1.50 bottle of soda, plus a five cent deposit, and it's a sneaky/stealth/backdoor 8% sales tax. A kid with two bottles of soda at $1.50 each, plus two hostess at a dollar, and a bag of Doritos at $0.75, is looking at a 7% tax. (The good thing is that they're not buying cigarettes at a national/state take of 50-60%, which I learned isn't going anywhere near smoking prevention programs, but to...wait for it...the rainy day fund.)
What are the efforts to control our smoking and eating habits anyway? I call these efforts health eugenics - the efforts of a government to conform the citizens into a perfect, docile, asexual, compliant group of Stepford people. Utopia ain't here and never will be. Trying to manipulate life and people for the promotion of utopia has violent, even deadly, results.
Here is my bit of friendly advice to Ray Considine, who is the head of the Medical Foundation in Boston. A lot of those kids come to Hyde Park from other parts of the city - mainly the inner city, like Roxbury and Dorchester. Their families likely cannot afford organic/vegan/super healthy things to begin with, so the kids don't get a healthy, nourishing breakfast. So they either (a) wait until they get into school, where the breakfast they serve is so bad even the rats refuse to eat it, or (b) they purchase quick cheap energy, like L'il Hugs, Doritos, and Little Debbies. Not many of them would be patient enough to buy a banana or buy a little cup of Milk and Cinnamon Toast Crunch.
Unless you want a full-bore black market on junk food - to which many kids will gladly profit from and mark up the price to willing demand - forget the snack tax. It's a tax that will not fund health programs or anything remotely resembling health. (Notice I'm using the word "health" and not the diaphanously ambiguous and Orwellian "wellness.") They will be boomerang taxes, going from the poor to the government to fill their rainy day fund.
"But it will only add up to pennies!" you proclaim.
Horse hockey. For every dollar these kids spend, it's 5 pennies to the state. Five percent sales tax. Add that to a $1.50 bottle of soda, plus a five cent deposit, and it's a sneaky/stealth/backdoor 8% sales tax. A kid with two bottles of soda at $1.50 each, plus two hostess at a dollar, and a bag of Doritos at $0.75, is looking at a 7% tax. (The good thing is that they're not buying cigarettes at a national/state take of 50-60%, which I learned isn't going anywhere near smoking prevention programs, but to...wait for it...the rainy day fund.)
What are the efforts to control our smoking and eating habits anyway? I call these efforts health eugenics - the efforts of a government to conform the citizens into a perfect, docile, asexual, compliant group of Stepford people. Utopia ain't here and never will be. Trying to manipulate life and people for the promotion of utopia has violent, even deadly, results.
4/06/2009
Some ideas on tobacco
I am a non-smoker. I have smoked maybe once or twice, but never took up the habit. My mother is an 18-year non-smoker, quitting in 1991. My brother quit in 2000. I do not have a problem with smokers, however - if they choose to take up the habit, I'm not going to stop them.
I have always stood by the notion that the taxation system we have in our country is circular. The government slaps taxes on the rich, and the government gives money to the poor. The poor think they're on easy street - until they have to fork over fees, taxes and other items, making them even poorer. And of course, all these taxes fliter right back to the government.
I think the state has just as much of an addiction to sin taxes as smokers do to cigarettes. I would bet most of that tax money doesn't quite make it to children's health care, or smoking cessation programs, or the like. Rather, it makes up for budget shortfalls and pork - so even though the thin veil is "for the children," it's really "for the government who can't control their spending and rely on the people to fund their shortfalls." The Carrie Nations of tobacco - the finger waving nags and lobby-funded nannies who seem to have no problem with being "control freaks" - until the revenue dries up when smokers finally quit or the state bans tobacco entirely. Then they need a huge nicotine-style patch to get over their money cravings.
I offer four ideas that may or may not assist in the fight between government and smokers.
1. Rather than banning cigarettes outright, put them under state monopoly - liquor and lottery tickets too.
Taking tobacco products off the shelves of convenience stores and liquor stores in a Carrie Nation-style fervor shifts the tobacco sales underground. Taking them off the shelves and making the state responsible for pricing and distributing these items is a much better alternative, as it puts the full onus of monitoring and sales on the Commonwealth, not on mom-and-pop stores. If it includes State Police monitoring IDs, all the better, as mom-and-pop stores shell out punitive fines for catching underage smokers.
In fact, tobacco and liquor should be put under state monopoly. If the state of New Hampshire can be successful in having State Liquor Stores, so can the Commonwealth. Let the convenience and liquor store lobby seethe - many have done a lax job in monitoring anyway and have the fines and multiple-day sales prohibitions to show for it. The Commonwealth will no longer have to shell out commissions or fees, and can be in direct competition with New Hampshire. It will also force the Commonwealth to defend itself against critics - "If smoking is so dangerous, why is the state being a enabler? Must be for the taxes, correct?"
2. Illustrate the total price -including wholesale, distribution and marketing fees, federal, state, and sales taxes - for a pack of cigarettes.
People are already angry that their cigarettes are pushing $9 a pack. $3.52 of that is federal and state tax, plus an additional 20-40 cents in sales tax. On the really cheap cigarettes - which last year were $4 and now are $6 - the wholesale prices really shock the dickens out of smokers, i.e. "They buy for this cheap and they sell it for this outrageous price?"
E.g. $4.00 wholesale per pack of premium cigarettes + $1.01 federal tax + $2.51 state tax + $0.38 sales tax = $7.91 per pack. Total tax take based on price - 50%.
E.g. $2.50 wholesale per pack of budget cigarettes + $1.01 federal tax + $2.51 state tax + $0.30 sales tax = $6.33 per pack. Total tax take based on price - 61%.
These taxes are far higher and easier to collect than the income tax of 35% - and everyone pays it. They are definitely regressive - meaning the poor, who pay little or no income taxes, will see themselves forking over almost 61% in tobacco taxes instead - hence the circular function of taxation in our country, from rich to the government in taxes, the government to the poor in entitlements, and then the poor back to the government in sin taxes and fees.
Another interesting thing to consider: when minimum wages in the 1970s were $1.25 per hour, a pack of cigarettes cost around 40 cents, so a MW earner could buy about 2 packs of cigarettes. Today, the state mimimum wage is $7.50, and now a pack of cigarettes costs $8 and effectively prices a MW worker out of a pack of cigarettes by 50 cents, yet it also removes one potential revenue source. The government loses out on tax revenue when a MW worker cannot afford to buy the premium cigarettes at $8 a pack.
3. For those who wish to quit, the lure of free money is always the best incentive.
The Commonwealth should institute a program that encourages people to quit. Take a sliver of all that tax money collected from smokers and offer them a deal - go into a smoking cessation program (with patches, chewing gum, pills and the like) and if they successfully complete a six month program, you can take $2,500 off your taxes. After that, all that money in taxes you spent on cigarettes is yours to keep and save - and invest wisely.
4. For once and for all, investigate the effects of tobacco, free of politics and lobbyists - and then release the results to the public and take appropriate action.
If independent research - free from lobby groups, rigged numbers that trill of the tip of the tongue, and others - determine that tobacco is indeed dangerous and has caused deaths and health problems, then the people and the Commonwealth can come to an agreement on what the next step is. If a ban is appropriate, then so be it. If putting gross pictures of cancer victims will be an effective deterrent, even better.
Aside (in honor of Kate Jackson at Pointy Universe): When I watch those ads on TV with the young college kids demonstrating all the icky things that happen when you smoke, or all that statistical mumbo-jumbo, I think to myself, "What do they do afterwards? I know...they pull out a big fat joint and take a hefty drag on it." (Yes, Kate - this proves I do read your blog!)
But giving the responsibility of research to the tobacco or anti-tobacco lobby invites trouble, as the statistics can be skewed one way or the other to their favor.
Not all of you will agree with my proposals. They are ideas worth considering, however.
I have always stood by the notion that the taxation system we have in our country is circular. The government slaps taxes on the rich, and the government gives money to the poor. The poor think they're on easy street - until they have to fork over fees, taxes and other items, making them even poorer. And of course, all these taxes fliter right back to the government.
I think the state has just as much of an addiction to sin taxes as smokers do to cigarettes. I would bet most of that tax money doesn't quite make it to children's health care, or smoking cessation programs, or the like. Rather, it makes up for budget shortfalls and pork - so even though the thin veil is "for the children," it's really "for the government who can't control their spending and rely on the people to fund their shortfalls." The Carrie Nations of tobacco - the finger waving nags and lobby-funded nannies who seem to have no problem with being "control freaks" - until the revenue dries up when smokers finally quit or the state bans tobacco entirely. Then they need a huge nicotine-style patch to get over their money cravings.
I offer four ideas that may or may not assist in the fight between government and smokers.
1. Rather than banning cigarettes outright, put them under state monopoly - liquor and lottery tickets too.
Taking tobacco products off the shelves of convenience stores and liquor stores in a Carrie Nation-style fervor shifts the tobacco sales underground. Taking them off the shelves and making the state responsible for pricing and distributing these items is a much better alternative, as it puts the full onus of monitoring and sales on the Commonwealth, not on mom-and-pop stores. If it includes State Police monitoring IDs, all the better, as mom-and-pop stores shell out punitive fines for catching underage smokers.
In fact, tobacco and liquor should be put under state monopoly. If the state of New Hampshire can be successful in having State Liquor Stores, so can the Commonwealth. Let the convenience and liquor store lobby seethe - many have done a lax job in monitoring anyway and have the fines and multiple-day sales prohibitions to show for it. The Commonwealth will no longer have to shell out commissions or fees, and can be in direct competition with New Hampshire. It will also force the Commonwealth to defend itself against critics - "If smoking is so dangerous, why is the state being a enabler? Must be for the taxes, correct?"
2. Illustrate the total price -including wholesale, distribution and marketing fees, federal, state, and sales taxes - for a pack of cigarettes.
People are already angry that their cigarettes are pushing $9 a pack. $3.52 of that is federal and state tax, plus an additional 20-40 cents in sales tax. On the really cheap cigarettes - which last year were $4 and now are $6 - the wholesale prices really shock the dickens out of smokers, i.e. "They buy for this cheap and they sell it for this outrageous price?"
E.g. $4.00 wholesale per pack of premium cigarettes + $1.01 federal tax + $2.51 state tax + $0.38 sales tax = $7.91 per pack. Total tax take based on price - 50%.
E.g. $2.50 wholesale per pack of budget cigarettes + $1.01 federal tax + $2.51 state tax + $0.30 sales tax = $6.33 per pack. Total tax take based on price - 61%.
These taxes are far higher and easier to collect than the income tax of 35% - and everyone pays it. They are definitely regressive - meaning the poor, who pay little or no income taxes, will see themselves forking over almost 61% in tobacco taxes instead - hence the circular function of taxation in our country, from rich to the government in taxes, the government to the poor in entitlements, and then the poor back to the government in sin taxes and fees.
Another interesting thing to consider: when minimum wages in the 1970s were $1.25 per hour, a pack of cigarettes cost around 40 cents, so a MW earner could buy about 2 packs of cigarettes. Today, the state mimimum wage is $7.50, and now a pack of cigarettes costs $8 and effectively prices a MW worker out of a pack of cigarettes by 50 cents, yet it also removes one potential revenue source. The government loses out on tax revenue when a MW worker cannot afford to buy the premium cigarettes at $8 a pack.
3. For those who wish to quit, the lure of free money is always the best incentive.
The Commonwealth should institute a program that encourages people to quit. Take a sliver of all that tax money collected from smokers and offer them a deal - go into a smoking cessation program (with patches, chewing gum, pills and the like) and if they successfully complete a six month program, you can take $2,500 off your taxes. After that, all that money in taxes you spent on cigarettes is yours to keep and save - and invest wisely.
4. For once and for all, investigate the effects of tobacco, free of politics and lobbyists - and then release the results to the public and take appropriate action.
If independent research - free from lobby groups, rigged numbers that trill of the tip of the tongue, and others - determine that tobacco is indeed dangerous and has caused deaths and health problems, then the people and the Commonwealth can come to an agreement on what the next step is. If a ban is appropriate, then so be it. If putting gross pictures of cancer victims will be an effective deterrent, even better.
Aside (in honor of Kate Jackson at Pointy Universe): When I watch those ads on TV with the young college kids demonstrating all the icky things that happen when you smoke, or all that statistical mumbo-jumbo, I think to myself, "What do they do afterwards? I know...they pull out a big fat joint and take a hefty drag on it." (Yes, Kate - this proves I do read your blog!)
But giving the responsibility of research to the tobacco or anti-tobacco lobby invites trouble, as the statistics can be skewed one way or the other to their favor.
Not all of you will agree with my proposals. They are ideas worth considering, however.
4/03/2009
Not quite a one newspaper town?
The New York Times is telling the unions at the Globe: give us $20 million in concessions, or the Globe will be no more.
And the Old Grey Lady isn't kidding.
I sometimes read the Globe and even though I don't agree with its editorial slant, I feel just a teeny bit smarter. The problem is that the Globe is geared to the upper-middle and upper classes of Boston; the Herald, while tabloidy and sensational, is for the more working-class of us.
The Metro? The bastard child of the Herald and the Globe that no one wants to admit is theirs. The Globe owns that too; maybe they should get an reasonably balanced editorial board and cut all the crap out of it.
And the Old Grey Lady isn't kidding.
I sometimes read the Globe and even though I don't agree with its editorial slant, I feel just a teeny bit smarter. The problem is that the Globe is geared to the upper-middle and upper classes of Boston; the Herald, while tabloidy and sensational, is for the more working-class of us.
The Metro? The bastard child of the Herald and the Globe that no one wants to admit is theirs. The Globe owns that too; maybe they should get an reasonably balanced editorial board and cut all the crap out of it.
3/27/2009
Grandma got run over by the DOR
I don't condone smoking, but I just noticed that cancer sticks, over the past decade or so, have more than doubled in price. You could get a generic brand of smokes for $2, and a name brand for $3. Today, a generic pack costs $5.50 and a name brand pack is $7.50. This is due to our $2.51 state tobacco tax and the new $1 or so tax to fund children's health care. Cross the border into New Hampshire, and the prices are slightly less.
One industrious lady went the route of getting generic cigarettes from an Native American Smoke shop. One carton of their brand goes for the rock-bottom price of $14.89 - which comes out to 79 cents a pack. Pretty good deal, right? And the Native Americans, since they operate from a sovereign nation (aka the reservation), don't charge taxes on what they sell. You can get name brand cigarettes for $35 a carton - a huge savings over Massachusetts' $150 per carton.
But the Native Americans, making sure they keep kosher with the states, report whoever buys their cigarettes to the tax rolls of each state. As a result of buying 5 cartons of Seneca unfiltered cigarettes, this woman now must pay an additional $91.58 to the state. And, she's refusing to pay, even if they levy penalties and interest.
Let's calculate what's going on here. $14.89 times five cartons is $74.45. In order to tack on $91.58 to her bill, the tax on each additional carton must be $18.316, making her actual purchase (in the eyes of the Commonwealth) $166.03 - or $33.21 a carton. Why would the state chase this woman over cheap generic cigarettes at $33.21 a carton when there are bigger fish to fry - the people who fork over $150 for name brand cigarettes? Maybe it's because the Native Americans have a much better handle on freedoms and what it means, versus the health neurotics who can't seem to keep their germophobic mitts out of other people's business - and if they had a chance, not only would they not hand over names, they'd tell the states what rabbit hole to go down to?
When cigarettes and tobacco are banned from the state, I can tell exactly who's going to need the bigger nicotine patch - the Mass DOR, as billions of tax dollars generated from cigarette and tobacco sales fund everything the desire, and you bet they'll have a jones worse than a heroin withdrawal once that tax money goes away.
One industrious lady went the route of getting generic cigarettes from an Native American Smoke shop. One carton of their brand goes for the rock-bottom price of $14.89 - which comes out to 79 cents a pack. Pretty good deal, right? And the Native Americans, since they operate from a sovereign nation (aka the reservation), don't charge taxes on what they sell. You can get name brand cigarettes for $35 a carton - a huge savings over Massachusetts' $150 per carton.
But the Native Americans, making sure they keep kosher with the states, report whoever buys their cigarettes to the tax rolls of each state. As a result of buying 5 cartons of Seneca unfiltered cigarettes, this woman now must pay an additional $91.58 to the state. And, she's refusing to pay, even if they levy penalties and interest.
Let's calculate what's going on here. $14.89 times five cartons is $74.45. In order to tack on $91.58 to her bill, the tax on each additional carton must be $18.316, making her actual purchase (in the eyes of the Commonwealth) $166.03 - or $33.21 a carton. Why would the state chase this woman over cheap generic cigarettes at $33.21 a carton when there are bigger fish to fry - the people who fork over $150 for name brand cigarettes? Maybe it's because the Native Americans have a much better handle on freedoms and what it means, versus the health neurotics who can't seem to keep their germophobic mitts out of other people's business - and if they had a chance, not only would they not hand over names, they'd tell the states what rabbit hole to go down to?
When cigarettes and tobacco are banned from the state, I can tell exactly who's going to need the bigger nicotine patch - the Mass DOR, as billions of tax dollars generated from cigarette and tobacco sales fund everything the desire, and you bet they'll have a jones worse than a heroin withdrawal once that tax money goes away.
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