Tuesday, January 01, 2013

Tax, Tax, Tax that Cigarette

"It was Jimmy Burke who put me into cigarettes. I knew about them from having been in North Carolina. A carton of cigarettes was $2.10 in the South at the time, while the same carton would cost $3.75 just because of the New York taxes. Jimmy came by the cab stand one day with his car full of cigarettes. He gave me a hundred cartons and said I should try to sell them. I went over to a nearby construction site and sold every carton I had in ten minutes. The working guys were saving about a buck a carton. I could make 25 cents a carton in ten minutes on my end.

Pretty soon me and Tommy were importing the cigarettes ourselves. We'd fly down to Washington, DC, take a cab to the truck rental place, use a fake license and ID to get the truck, and then drive to one of the cigarette wholesalers in North Carolina. We'd load up with about eight or ten thousand cartons and drive north. We burned out half the U-Haul places in Washington, DC. They went bust, Eventually we had to buy our own trucks - the business was that good."

-- Henry Hill, Wise Guy

We all know the phenomenon, but I've never seen it in this format.

NOW it's easy to see why there's so many cigarette stores on the Missouri border. Iowa hiked its tobacco tax a dollar a back in the Culver trifecta era, though we're still on the low end. But Missouri has the lowest rates in the nation.

So they probably don't sell that many smokes in Keokuk... but it looks like they would in Marquette and Lansing.

I suspect the border stores are even more prominent just east of Spokane, given the $2.46 tax difference between Washington and Idaho. And it's a no-brainer for a commuter smoker living in DC but working in NorVa; that's probably the biggest gap in the middle of a major metro area. (New York to New Jersey seems like a longer haul than DC to Arlington.)

But the MOST worthwhile drive for smokes is from New York to Pennsylvania. The Keystone State's tax is higher than ours... but New York still, fifty years after the Goodfellas era, has by far the highest per-pack tax. If you live in Binghamton or Elmira, a little drive will save you $2.75 a pack. A lot more worth the trip than taking your cans to Michigan.

There seems to be a high correlation between extreme low tobacco taxes and GOP voting patterns--look how the old Confederacy (with its many tobacco growers) stands out. Likewise, the region with the highest cigarette tax rates is the deep blue Northeast. Makes you wonder what's up in California.

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