Cigar taxes to rise 20,000%!

[bassjones]

http://www.sptimes.com/2007/07/17/Busin ... pani.shtml

"I'm not sure in the history of man, since our forefathers founded the country in 1776, that there's ever been a tax increase of 20,000 percent," said Newman, who runs the Tampa business founded by grandfather Julius Caesar Newman. "They had the Boston Tea Party for less than this."

"Why don't we just go out of business?" Newman said. "Here, you can run our company, Mr. Government."

Here's the source of the controversy: The Democrat controlled Congress has sought an extra $35-billion to $50-billion for the state children's health insurance program. The program distributes payments to the states to help buy coverage for kids not poor enough for Medicaid.

Under the proposed bill, taxes on "large cigars," a category that includes all but the tiny cigars sold in 20 packs like cigarettes, would rise to 53 percent.

A U.S. Senate version of the bill under consideration today in the Finance Committee sets the maximum tax per cigar at $10.

"I thought there was a typo. I thought they meant 10 cents per cigar, not $10 per cigar. I was stunned like everyone else," Sharp said.

"A good wine. A good scotch. A good bourbon. A good cigar. It all enhances the quality of life," Newman said. "We're in the relaxation business."

[MrSpall]

Funny playing with the numbers here. The tax is going up to 53%. The only way that this is a 20,000% increase is if the previous tax per cigar was .265% (by comparison, fast food in many places gets a special 1% tax on top of the states regular sales tax). 53% is a large amount of taxation, but not a 20,000% increase as stated in the article. The 20,000% increase is in the MAXIMUM per cigar tax. Before now, the maximum tax on a single cigar was a nickel. Now the max has gone up to $10.

Let's do some math.

A 50 pack of 'It's A Boy' cigars generally costs around $25 (according to the prices I found at tobacco retailers online). With the old tax system of 5 cents per cigar, plus the Indiana 6% sales tax, the total would be $29. A total tax of $4. With the new tax of 53%, on top of Indiana's 6% sales tax, the total comes to $39.75. A total tax of $14.75.

14.75 over 4 is an increase of 368.75%. This is a large increase, it's probably an unfair increase. A lot of other people have unhealthy habits that could pay for this healthcare. But 368.75 is one hell of a long way from 20,000.

Statistics lie.

[bassjones]

20,000% is on the top end and the original proposal was $20 tax on some cigars. The example you gave is pretty cheap cigars. Try a box of 20 Arturo Fuentes (a nice mid-grade cigar), which depending on the wrapper and ring size could run you $100 a box or more. 53% tax on that takes it up to $153. And like I said that's a mid-grade cigar. $20 a stick isn't uncommon to pay for a really nice smoke.

[Garr]

Well, Spall, your math is really convoluted and you're mixing costs and percentages from different aspects of things.

Remember that 20,000% increase = 200 times.

If the previous tax was $0.05 and the new tax is $10.00,then $10.00 ÷ $0.05 = 200.

Come on. . .

What Percent of What Number = What number? I learned this in the fifth grade.

20,000% of $0.05 = $10.00

The problem is that the article is convoluted as well. . .and mixes its formulas.

[MrSpall]

Yes, but Garr the new tax isn't $10 per cigar. That is, once again, the MAXIMUM per cigar tax. The actual tax on cigars is 53%, but with a $10/cigar cap. The previous tax rate (which isn't stated) apparently had a cap of 5 cents/cigar. That is where the 20,000% increase comes in. However, most cigars, taxed at 53% won't reach $10/cigar, so the maximum cap becomes moot.

Check my math again - and read the article - I'm right.

P.S. 0.53 = 200 x 0.00265 That is where that number came from.

[MrSpall]

@jones

$20/smoke? Really? I've never bought any cigars that weren't announcing the birth of my daughter, so I honestly had no idea they got that expensive. In that situation, the tax cap of $10 would actually come into play. That would indicate a 20,000% increase on those top-end cigars, so the math isn't entirely wrong. But the ariticle makes the generalization that all cigar taxes are going up by such an outrageous fee, and that is a bit misleading.

[bassjones]

Most good cigars cost in the neighborhood of $10 and up, so a large percentage of them will be taxed at between $5 and $10 per stick. Also, part of this bill includes a 50% inventory tax, which means if a large wholesaler like JR Cigar, Papa Cigar, Thompson Cigar, etc... has $1 million in inventory they will have to pay $500,000 in inventory tax. Those 3 all most likely have well over $1 million in inventory, probably 5 x's that amount. This will be passed along as well, so the $7 cigars I currently favor will likely go up to $12 a stick, plus the 53% tax, plus the 6% sales tax, which means I'm going to be paying upwards of $20 for a cigar that used to cost me $7.50.

[MrSpall]

Damn, that sucks. Think I'll stick to my 'It's A Girl' cigars. I still got a few. Perhaps I'll share at the fantasy football draft.

[Oliver's Army]

Jones, how many freaking $20 cigars do you smoke anyway?

Complaint>dead horse

[Garr]

your math might be right, but it's misrepresenting the truth.

you can't compare the old tax percent to the new tax cap.

you can only compare the old tax cap to the new tax cap or the old tax percent to the new tax percent. in comparing the old tax cap to the new tax cap, there is a 20,000% difference.

in addition, the article really isn't well written because it tries to mix-manage those two terms as well.

without knowing what the old tax rate was, you can't calculate the increase of the new tax percent.

statistics may lie, but this is not statistics. this is a single equation relating the old cap and the new cap. there are no statistics even being discussed here.

[bassjones]

Jones, how many freaking $20 cigars do you smoke anyway?

Complaint>dead horse

I don't. I smoke $6 and $7 cigars. However those are likely to go up to $12-$15 each, which prices me right out of my one or two a week, which then further penalizes those relatively small cigar manufacturers and wholesalers on top of their new confiscatory 50% inventory tax.

This is what happens when you elect Democrats to run things. They raise taxes on EVERYTHING. Republicans aren't much better, but they're better than this. If they can't pass laws to stop behavior they don't like, they'll try to guilt trip you into it, and if they can't guilt trip you into it, they'll tax your ass into compliance.

$100 says they try to raise taxes on firearms and ammunition sales before too long. That and fast food are their next targets. The luxury tax practically drove US yacht manufacturing companies out of business and they'll attempt to do the same for SUVs here soon with fuel efficiency standards and any other industry they don't like.

[Garr]

how can a $6 cigar go up to $12 with a tax that is only 53%? That would go up to $9.18.

[bassjones]

I'm counting on them to raise prices to cover their losses from their inventory taxes.

[Sankofa]

This is what happens when you elect Democrats to run things. They raise taxes on EVERYTHING. Republicans aren't much better, but they're better than this. If they can't pass laws to stop behavior they don't like, they'll try to guilt trip you into it, and if they can't guilt trip you into it, they'll tax your a#% into compliance.

As opposed to the Republican party which has tried to bomb the middle east into a democracy without thinking they'll need raise taxes to pay for it?

I'm with Ollie on this one.

[bassjones]

reducing taxes increases revenue into the federal coffers via increased consumer spending.