Friday, October 24, 2014

Interstate Cigarette Smuggling

This piece from the Vice website gives us some fascinating insights into the dynamics of cigarettes and taxes. The moralistic, do-gooder, prohibitionist elements of post-Puritan American society have yet to subvert what remains of the Constitution to the extent of a tax structure that would make cigarette prices the same from one state to another. There is a federal tax of $1.0066 per pack of weeds but the state tax hit varies considerably. Missouri, the least predatory state in nicotine taxation, adds only .17 to the cost of 20 Marlboros. Those same coffin nails will cost an extra $4.35 if purchased in New York. Additionally, some cities slap on an extra charge for polluting the air as well.  Chicago ($1.18), Cook County ($3.00), Illinois ($1.98) adds $6.16 to a pack of cigarettes, the highest levy in the country.The Big Apple gets $1.50 and Anchorage $2.206.

Not surprisingly, entrepreneurial souls have taken advantage of the disparity in taxes to satisfy the wants of the less enterprising by selling imported cigarettes in packs or singly on the street. This article from the New York Times tells about "Lonnie Loosie", a felon that, in the day of the comprehensive background check, will never be able to get a "real" job. He makes ends meet by peddling single smokes for .75, each, two for a dollar, and a pack of the popular Newports for $8 on the streets of midtown Manhattan. Interestingly, some of his customers are women that work in nearby offices who arrange their purchases by cell phone.

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