The Cigar Nannies

David Hogberg has a piece in the OpinionJournal regarding last week’s decision by members of the Senate Finance Committee to increase funding for the State Children’s Health Insurance Program by $35 billion over five years.

How will they come up with the money? A luxury tax on cigars. Hogberg, correctly, contends that Senators have learned nothing from history.

And if members of Congress never considered that the luxury tax would discourage rich people from buying luxury items in the U.S., then they surely never considered that such an effect might not be so good for the Joe Six-Packs who worked in the industries producing luxury items. A Joint Economic Committee study later found that 330 jobs in the jewelry industry and 7,600 jobs in the yacht industry were lost thanks to the luxury tax. Perhaps the greatest irony was that in 1991 the federal government paid out over $7 million more in unemployment benefits to those workers than it collected in luxury tax revenues.

In reality, luxury taxes are another form of a sin tax – but even better. It’s a sin tax that targets those dreadful wealthy folks. And having attentively watched the Democratic debate the other day, I learned that rich Americans are sucking this planet dry.

Why do Americans need to smoke cigars, anyway? Those things are filthy and irritating and unhealthy and symbolize all the ostentatious rottenness of capitalistic access. 

Yep. That’s why. 

The problem is luxury taxes never hurt the rich, they only rob the poor and middle class of choices. As Jonah Goldberg pointed out,“If this absurd tax goes through, poor people  won’t be able to afford cigars while rich people will have no problem carrying this additional freight. It will be inconvenient to be sure, but Rush Limbaugh and Bill Clinton will still be able to buy whatever cigars they like.”

How inconvenient? The current tax on cigars is a maximum 4.8 cents a cigar. The new proposed luxury tax on cigars is 53.13%, up to a maximum tax of $10 a cigar. If your cigars is worth $20, you’d be facing a 20,733 percent.