New York Cigarette Tax Fails to Bring in Projected Revenues: Anyone Surprised?

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One thing that statists miss is that taxes change human behavior.  When something is taxed to the extent that it becomes less affordable, people will either stop using the taxed item, use less of the taxed item, or obtain the item by other means.  For the latest, NY State is lamenting the fact that their cigarette tax revenue is far below expectations…

The Empire State is struggling to bring in additional tax revenue it projected it would gain from efforts to stop smokers from buying untaxed  cigarettes on Indian Reservations, reports the New York Post:

The state’s tax collectors were recently calling around to convenience-store owners, wondering what was up. The $130 million in extra tax that Albany was expecting from a change in the law about cigarette sales on Indian reservations wasn’t happening.

A memo sent to members of the New York Association of Convenience Stores from the group’s president, Jim Calvin — a copy of which I have on my desk — said, “I got a call from Gov. Cuomo’s budget office yesterday. In examining cigarette tax receipts so far this fiscal year (April 1 to March 31) it looks like they will fall considerably short of their projection in new revenues. . . .”

The state had hoped to get the extra dough by enforcing a new law that made it illegal for licensed cigarette wholesalers in the state to sell untaxed name-brand cigarettes like Newport and Marlboro to Indian reservations.

We’ve covered it many times before.

When something is taxed, people lose jobs…

Note that all of these articles are take from different times during the existence of this tax, which was later repealed, but the damage was already done.

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According to a survey of the largest boat dealers in Connecticut, conducted by the Marine Retailers Association of America (MRAA), sales of boats costing $100,000 or more have fallen 93 percent, from $7.879 million in 1990 to $ 545,000 for the same period this year. Nationwide, more than 19,000 people have been put out of work at boat making plants.

Source

In fact, something similar happens when you tax people…

The source is found here.

Here’s a two-minute drill in soak-the-rich economics:

Maryland couldn’t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O’Malley, a dedicated class warrior, declared that these richest 0.3% of filers were “willing and able to pay their fair share.” The Baltimore Sun predicted the rich would “grin and bear it.”

One year later, nobody’s grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller’s office concedes is a “substantial decline.” On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year — even at higher rates.

Way to go Maryland!  Yet another example of higher taxes yielding smaller returns!   How many jobs went out with them, I wonder?

So, you can tax products, or people, and there are always negative consequences.  But, that doesn’t go along with the class warfare narrative, so I guess we won’t be seeing anything like this in the MSM, will we?

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  • A few things… people moving out-of-state, people cutting back on smoking due to cost, quitting, or rolling their own and, of course, people buying their smokes in NJ or CT, too.

    • Yeah, I cover all of that in the post. That’s what happens when you tax something. People, and their wealth, is mobile.

      • Yes. Better to tax something besides a deadly habit!

        • Better to tax nothing, or some things as little as possible. Because, the nanny state telling us what to consume is a great thing, right?

  • Liberals have to know that this is what happens but they don’t care because they see this class warfare as a winning position to hold onto power. They are content with winning reelection even if it means promoting and implementing policies which ultimately hurt the economy.

    • Actually, hurting the economy drives more people onto government programs, and therefore, dependency. It fits.

  • “Sin” taxes do typically backfire.

    • That they do. People find ways around them.