OT - Attention All Cigar Smokers!!
 

I'm sure many of you are aware that the first TAX (of many) that Obama has signed into Law was the SCHIP Bill (State Children’s Health Insurance Program).

This program, while argueably laudible, uses the sale of Tobacco products to fund it (let's not do something smart like taxing cereal, which children actually eat, and which would provide much more funding to the program, but I digress).

This Tax goes into effect @12:01am 4/1/09.

It will equal 52.75% of the manufacturer's price (capped at $40.26 per cigar - cigars of $80 or more). This is a 32.05% increase over the current tax and is retroactive to all existing shop inventories as of 12:01am on 4/1/09.

So, now is the time to stock up and fill your humidors. Not only will you save the Tax, but vendors are right now offering very nice deals in order to reduce their inventries by the April 1st deadline.

Unfortunately, this will negatively affect sales and probably force many cigar stores out of business, cost jobs, and further depress our current economic climate.

But hey, such is the price of Socialism I guess. Can't wait til the Dems cast their predatory eyes toward motoring enthusiasts and collectors - it's gonna happen!

Classic liberal strategy: Tax something you think is "BAD" and deserves to be stamped out.

Of course, they are hoping you keep buying cigars, as they want the money. Imagine if it actually worked and NO CIGARS were sold at all. That would mean no money for the kids healthcare.


OWWWWWW that would be bad, or good? :confused:

sheesh..al these new tax laws that getting signed makes me want to be a caveman again :troll:

The cigar shops and martini bars that cater to the cigar crowd here in Michigan thought they had won when the smoking ban was shot down. Guess they celebrated too soon.

:ah:

With the economic sky falling, folks need their diversions. This is not the time to try go cold turkey, too much bad news! :chicken:

As long as the cave has ample parking for the boxster, I think you'll do fine :dance:

Now go make a fire and grunt a lot when you finally get it started.

Then reinvent the wheel and pleeeeeeeeeeaaaaaaase improve on the design this time.

BTW, I will fill the humidor soon. I only smoke three or four a year, but I might as well buy ten year's supply and just keep the humidor nice and moist.

If I understand the above correctly, then the 32.05% increase over the current tax means that the current tax rate is ~40% of the manufacturer's price? So, to take your example, on a cigar costing $80, the current tax is ~$32, while the tax under the new code will be ~$40?

Just trying to clarify what the numbers mean :)

OK... to clarify, this tax affects all tobacco and tobacco related products. Here is a list of these products, along with their current and revised tax costs:

• Product Current Rates Through March 31, 2009 / Rate April, 1 2009

• Cigarettes 39¢ per pack / $1.0066 per pack

• Large Cigars 20.719% of mfgr. price; cap of 4.875¢/cigar / 52.75% of mfgr.
  price; cap of $40.26 /cigar

• Little Cigars 4¢ per pack / $1.0066 per pack

• Pipe Tobacco $1.0969 per pound / $2.8311 per pound

• Chewing Tobacco 19.5¢ per pound / 50.33¢ per pound

• Snuff 58.5¢ per pound / $1.51 per pound

• RYO; Cigar Wrappers $1.0969 per pound / $24.78 per pound

• Cigarette Paper 1.22¢ per 50 papers / 3.15¢ per 50 papers

• Cigarette Tubes 2.44¢ per 50 tubes / 6.30¢ per 50 tubes

source: NATO - Nat'l. Assn. of Tobacco Outlets

Another concern of mine is that this tax will not be fully utilized for it's stated purpose, similar to the gains the Gov't. got from the Tobacco lawsuits. Some of that money went into building schools, roads and so on. A neat little trick the Gov't. uses is that if the revenues are not fully budgeted for a specific purpose, the 'unused' portion is then returned to the Gen'l. Fund. State Lotteries are prime examples. In my state, the wording on the Lottery Bill was that the proceeds were to be spent on Education and the Elderly. Last year, the state took in $250M in Lottery revenues, but only budgeted $60M each for Education and Elderly, $120M total. They then added the remaining $130M to the Gen't Fund to spend on all the pet projects they couldn't fund with taxes and other revenues.

Woodrow Wilson's VP, Thomas Marshall was immortalizrd by coining the phrase: "What this country needs is a really good five-cent cigar." I bet he never imagined that cigar taxes would rise to $40 per cigar! Just another Liberal Socialist idea gone wrong because the Fat Cats will still enjoy their cigars, they'll just pay the tax. But the little guy will be forced to give it up.

Thanks Lil B!
 

Many thanks for your detailed explanation - that clarified the confusion I had :)

OK, if someone can afford to smoke $80 cigars, they can afford to pay the $40 tax!

You're point being ...........?

My point is, the tax isn't as high as these intentionally inflated prices would seem to indicate. I normally stay out of political discussions, so I guess I'll stick to that policy!
Steve

Well, I oppose taxes on basic moral principle. To me, I can see the value of the cigar and choose to pay or not pay. On the tax, I have no choice and I can't see any value.

Having said that, I don't smoke! :D

Still, I don't see any reason to stick it to folks just because they have the dough. Using that logic, anyone with less, can take from anyone who has more.

I think that is called robbery.

I see your point. I do smoke Cigars occasionally. It suppose use taxes would be better if spread across all "non-essential" goods, not just the "bad" ones. Hell, I think a "flat tax" is a good idea, combined with use taxes. What's more fair then a percentage of what you earn? Most of us work hard, but some are compensated much better for it.

The universal inevitabilities are Death and Taxes, no question about that.

But, we're not talking about a New tax here, just a disproportionate Tax Increase.

Seems to me that the 'New Guy's' priorities are a little messed up. Tax increases, Abortion, Stem Cell research, Food Stamp increases, Peace Treaties w/ N. Korea (or otherwise playing right into their hands) IMHO, shouldn't necessarily be #1 on the Runway when the Dow is below 7k and unemployment is the worst since the Great Depression.

But, that's a political discussion and my only purpose was to give some of our guys a heads-up about a significant price increase coming soon so they can maybe save a few bucks.

:cheers:

Fair has nothing to do with the US Tax system. The folks who take the most from the govt normally pay in little or nothing. So, fariness is in the eye of the beholder.

The great shell game of the govt is to never have anyone question them about what they are up to. If you have a strong stomach, just look at how the feds spending always goes up, irrespective of what else happens in the world.

My basic question is, WHY IS THAT?

Just a thought.

:D :D

Regardless of your political affiliation, it has to chafe you that a staggering percentage (the number is hotly debated, but it's somewhere between 40 and 50 percent) of "tax units" (single people or married couples) pay no taxes or receive a refund of 100% or more of tax they do pay.

That means that roughly 50% of eligible voters pay no tax, yet get a say in how the income of the other half gets spent.

Rather than just outlawing tobacco, slapping another tax on this non-necessity is another way to get into our wallets.

I own my own business. I pay tax on any money I have left over at the end of the year. I pay tax on the money I pay my employees. I pay "use" tax - every year - on stuff I already own. I pay property tax - every year - for the privilege of living in the home I bought with post-tax dollars. If I buy gas or tobacco, (I do buy the former, I don't the latter, but I digress), I pay a HUGE percentage in taxes. Finally, if I die and leave my money to someone else, it gets taxed yet again.

I am a patriot at heart, and I think the USA is a fantastic place to live. However, hearing that the "rich pay no taxes" makes me want to start swinging a tire iron.

The irony of paying a higher cigar tax is that money will now get burned up twice - once when you fire up your Ashton or Don Carlos, and again when the tax money gets frittered away on some social program you won't qualify for because your income is too high.

so for the guy who just goes in to buy a nice cigar to smoke/enjoy - we CURRENTLY pay a MAX of 4.8 CENTS per cigar...but the new cap will be $40... and the tax rate will essentially more than double... so if a cigar costs $10, and the tax was about $2, now your $10 cigar is going to run you 12-13 bucks..

i see it this way - when I used to hit the cigar shop and figure I could get about 5 cigars for $50 - now i'm only gonna get 3-4.

can someone explain how my cigar smoking logically shoudl be taxed to benefit this program??? why not tax people who have kids... :)

I am totally with you. The agony is that even though we pay for most of what is spent on others, we still get pissed on by Obama for not paying our fair share. That is such a joke. You could at least say, "hey lets tell the truth, if these birds don't keep making the jobs and dough, you slackers are done for."

It will never happen btw. It is kind of sad.

What income bracket pays zero taxes, or receives 100% refund? They must be making $30K or less.

This link should help.

http://www.taxfoundation.org/research/show/1410.html

BTW- that data shows what a myth the issue of a middle class income tax cut is.

If 32% of folks are paying NOTHING, and you decide that you will cut the taxes of the BULK of the tax payers, HOW much money must you take from the so-called RICH??????

Give me a break. The non-tax payers will vote their interests which is to keep themselves as non-taxpayers.

God Bless America. :barf:

Don't you think a big jump on the price of cigarettes will increase theft of same? Cigarettes are already a draw to theives - about as much as a cash register is. On the flip side, this will boost the economy. The black market one.

Where are these people to be found? ZERO Taxes??
I don't think you are referrin' to our state. I don't know anyone making $50K (80% of this country) or $30K or less who doesn't pay property tax, sales tax, fuel tax, cell phone taxes, toll roads, etc.

I really get annoyed when I hear this notion that any working person in this country doesn't contribute to their local and state govts. There isn't a day the middle class and lower class don't dig into their pockets to pay for schools, roads, and state pensions.


I wish we would have seen more tax outrage when we were in the process of doubling our national debt in the span of less than eight years. Financing ten trillion in debt to the tune of hundreds of billion a year on wasted interest doesn't come from pork barrel spending cuts alone. Either cut entitlements or raise taxes.

Below are pallets of $100 bills. Now multiply the pic on the bottom by 5.
That's how much we spent but haven't paid for yet since 2000.


$1 Billion

http://www.pagetutor.com/trillion/pallet_x_10.jpg

$1 Trillion

http://www.pagetutor.com/trillion/pallet_x_10000.jpg


" Don't tax HIM, Don't tax ME, tax that fellow behind the tree..."

^ whoever said that must not have been long U.S. treasuries....

I'd have to agree, when I was single and earning $75K a year, I payed a large percentage of income taxes, with little refunded. Much more than my married co-workers. That link still doesn't give any earnings levels for these non-tax payers. I'd bet they're our large group of poverty level earners.

What I find amusing is that 11 of the top 12 least income paying tax states happen to be overwhelmingly Republican.

10 of the 12 most income tax paying states happen to be Democrat

seems to me like the people most likely to vote for higher taxes are those who are mostly footing the bill to begin with.

Uh... it seems as if 'your' guy is presiding over the single largest deficit in ALL of American history! At least that's how the History Books will record it!

Sure... you can blame it on the last guy... but if you peek beneath the skirt, you'll see a LOT of pork-barrel, ear-marked spending on items which fit a social adjenda and aren't truly relevent to the troubles at hand, and in fact, detract from it.

Increasing Food Stamps (I don't recall seeing any present Food Stamp recipients starving on the streets, or running around with extended bellies - seems increasing Food Stamp subsidies targets a particular voting demographic - ;), of course any resemblance is surely coincidental)... and as several learned economic academics have cited in the last 10 days, the Administration AND the congress ought to be targeting the economy EXCLUSIVELY and not cloud the picture (and expend energies) with partisan, special interest issues and programs - aka Equal Pay for Women, Stem Cell Research, Partisan re-districting, Cigar Taxes, Abortion, and so on. It's about the ECONOMY STUPID!

Get that straight and then go off and satisfy your personal adjenda! Without a strong and growing economy, everything else is for naught!! All IMHO of course...

:cheers:

Well, you have to be careful about the conclusion. For example, here in the Soviet republic of Kalifornia, anti-tax senitment is high. HOWEVER, it is largely high among the income generating folks. We have so many TAKERS here who vote, they overwhealm the tax payers.

That is why we have such an exodus of citizens. The sane ones are fleeing the asylum.

:confused:

Indeed, if you can't see through this budget and stimulus bill, you aren't looking.

Typical progressive view
 

I want a massive stimulus, but hey, I don't want to pay for it!

Hmmm, if not this guy, who?

:D







Hey, Mr. President: Who You Calling Rich?
By Stephen P. Diamond, Jr.
Progressive Blogger/Street Sweeper.com/Attorney

Last week, millions of Americans were surprised to discover that they are rich.

Well, not really.

But under President Obama’s proposed budget, many taxpayers earning more than $200,000 a year ($250,000 for married couples) and less than $500,000 have suddenly found themselves lumped together with the likes of Stephen Schwarzman and Donald Trump, even though they don’t own a private jet, live in a baronial mansion or bring Rod Stewart in to sing for them at their birthday parties.

I applaud the President for ramming through a massive stimulus package to kick start the economy into recovery. But his idea to fund it by raising taxes on the very people who will need to pick up where the stimulus package leaves off, is myopic and dangerously misguided.

Fortune magazine’s Shawn Tully has called these people “HENRYs” –aka “high earners, not rich yet.” They are doctors, lawyers, consultants, managers and small business owners who have prospered in recent years. At first glance, the president’s plan to make the rich pay a bigger share of the nation’s tax bill would seem to make sense.

The only problem is that the HENRYs are not rich.

As Tully explains, “‘Rich’ means personal wealth, or net worth, not income.” Raising taxes on HENRYs at a time when much of the value of their assets–their homes and retirement portfolios–has evaporated, could have unintended negative consequences for the economy and the president’s plan for recovery. Why? Because the HENRYs are big spenders. They are “the bulwark of the professional and entrepreneurial class that drives the economy,” writes Tully.

He’s not kidding. A 2007 HSBC Direct Consumer Survey found that people earning between $50,000 and $100,000 save more regularly than people earning between $200,000 and $250,000 per year, and revealed that 49% of respondents earning at least $250,000 a year failed to save more because they “want some spending money.”

On top of their discretionary purchases, HENRYs carry significant mortgages, pay heavy property taxes, make charitable donations and sock money away for their children’s college education.

Under the president’s plan, beginning in 2011, HENRYs would see their federal income tax rates rise from 33% to 36% and, in the highest tax bracket, from 35% to 39.6%. More importantly, the president’s plan would reduce the amount of mortgage interest and charitable donations that HENRYs could deduct for income tax purposes, from 35% to 28%.

Faced with declining asset values, tough economic times and higher tax bills, HENRYs will very likely rein in discretionary spending this year and next.

That’s bad news for a consumer-driven economy like the United States, which saw consumer spending in the fourth quarter of 2008 plunge to a 26-year low. But reducing mortgage interest deductions makes even less sense when the federal government is trying to reverse or at least stabilize falling housing prices–which, lest we forget, is how we got into this mess in the first place. One of the main incentives for HENRYs to buy a house (or anyone else for that matter) is that they can deduct more than a third of their annual mortgage interest payments from their adjusted gross income. Why buy a house when taxes are climbing and the housing market is tanking if the government is removing your ability to afford the payments?

In fact, the president’s decision to squeeze more taxes from HENRYs is pregnant with potential negative consequences.

Dual income families, in which one spouse’s salary is just below $250,000 and the other’s is significantly less, may decide that the increase in their marginal tax rate negates the benefits of the second salary , when combined with existing high childcare expenses. Many of these families could move to cut their tax liability and expenses by having one parent stop working to raise their children. Childcare companies would see smaller revenues, household spending would decrease and the U.S. labor force would contract even further (both from parents leaving the work force and childcare company lay offs), to name just a few possible ramifications.

If higher income taxes force HENRYs to cut back further charitable organizations, public school systems (many HENRYs send their children to private schools), automakers and other public and private sectors of the economy will pay the price. Such unintended consequences would work to counteract the potential benefits of the economic stimulus package the president signed last month.

I applaud the president for ramming through a massive stimulus package to kick start the economy into recovery. But his idea to fund it by raising taxes on the very people who will need to pick up where the stimulus package leaves off, is myopic and dangerously misguided.

Japan proved during its so-called “Lost Decade” that raising taxes during an economic downturn has a negative effect on consumer spending. “To counter mounting debt created by government stimulus packages,” observed former Secretary of the Treasury (and State) James Baker in Monday’s Financial Times, “Japan increased taxes in 1997. Consumption dropped and the country’s economy collapsed.”

The Japanese experience holds an ominous warning for President Obama.

Make no mistake–high net worth Americans (i.e., the truly rich) can afford and should pay higher taxes. But the president has cast too wide a net in his attempt to capture the big fish. Under his plan he will also trap the smaller ones that need to be let go. His recovery can’t work if he follows his current plan. Unless he wants his economic initiatives to fail, he should let the HENRYs go.

Wisdom from Dr. Sowell
 

Subsidizing Bad Decisions
By Thomas Sowell

Now that the federal government has decided to bail out homeowners in trouble, with mortgage loans up to $729,000, that raises some questions that ought to be asked, but are seldom being asked.

Since the average American never took out a mortgage loan as big as seven hundred grand-- for the very good reason that he could not afford it-- why should he be forced as a taxpayer to subsidize someone else who apparently couldn't afford it either, but who got in over his head anyway?

Why should taxpayers who live in apartments, perhaps because they did not feel that they could afford to buy a house, be forced to subsidize other people who could not afford to buy a house, but who went ahead and bought one anyway?

We hear a lot of talk in some quarters about how any one of us could be in the same financial trouble that many homeowners are in if we lost our job or had some other misfortune. The pat phrase is that we are all just a few paydays away from being in the same predicament.

Another way of saying the same thing is that some people live high enough on the hog that any of the common misfortunes of life can ruin them.

Who hasn't been out of work at some time or other, or had an illness or accident that created unexpected expenses? The old and trite notion of "saving for a rainy day" is old and trite precisely because this has been a common experience for a very long time.

What is new is the current notion of indulging people who refused to save for a rainy day or to live within their means. In politics, it is called "compassion"-- which comes in both the standard liberal version and "compassionate conservatism."

The one person toward whom there is no compassion is the taxpayer.

The current political stampede to stop mortgage foreclosures proceeds as if foreclosures are just something that strikes people like a bolt of lightning from the blue-- and as if the people facing foreclosures are the only people that matter.

What if the foreclosures are not stopped?

Will millions of homes just sit empty? Or will new people move into those homes, now selling for lower prices-- prices perhaps more within the means of the new occupants?

The same politicians who have been talking about a need for "affordable housing" for years are now suddenly alarmed that home prices are falling. How can housing become more affordable unless prices fall?

The political meaning of "affordable housing" is housing that is made more affordable by politicians intervening to create government subsidies, rent control or other gimmicks for which politicians can take credit.

Affordable housing produced by market forces provides no benefit to politicians and has no attraction for them.

Study after study, not only here but in other countries, show that the most affordable housing is where there has been the least government interference with the market-- contrary to rhetoric.

When new occupants of foreclosed housing find it more affordable, will the previous occupants all become homeless? Or are they more likely to move into homes or apartments that they can afford? They will of course be sadder-- but perhaps wiser as well.

The old and trite phrase "sadder but wiser" is old and trite for the same reason that "saving for a rainy day" is old and trite. It reflects an all too common human experience.

Even in an era of much-ballyhooed "change," the government cannot eliminate sadness. What it can do is transfer that sadness from those who made risky and unwise decisions to the taxpayers who had nothing to do with their decisions.

Worse, the subsidizing of bad decisions destroys one of the most effective sources of better decisions-- namely, paying the consequences of bad decisions.

In the wake of the housing debacle in California, more people are buying less expensive homes, making bigger down payments, and staying away from "creative" and risky financing. It is amazing how fast people learn when they are not insulated from the consequences of their decisions.

I guess people don't get it.
When you spend 5 Trillion on top of the already 5 Trillion on the national credit card in less than a decade,
YOU HAVE TO PAY IT BACK.
Or you could cut entitlements..........crickets...............crick ets...........

I hear a whole lot of talk of how not to tax that man or tax this man.
But I don't hear any idea of how to pay for the debts we rack up.

You could cease spending every dime on food stamps, bridges, roads, schools, more cops, etc. for every "liberal" (turns out there are more liberals than we realized when the layoffs accelerate) that Obama panders to, and you would still have trillions in debt to pay off and trillions more in entitlement spending to cut.

How are we going to pay for this??

This nation is at a long awaited impasse. Nobody wants to give up their benefits (just the next guy's). Nobody wants to pay more taxes. A third of the country only wants to score partisan points but have no solutions that don't incur more debt (so much for "fiscal conservatives"), the other third are scared out otheir minds that they are going to get layed off and face foreclosure and the other third are too young to understand any of it or are worrying about other things, like how to college without spending the next 20 years paying it back at 15% interest.