Democrats Declare War On A 19th Century Caricature

You might have thought the Democrats had learned something back in the days of the "Luxury Yacht Tax" fiasco but you would be dead wrong.

Cigarmakers in a panic: The federal tax on each cigar could rise from 5 cents to $10.

Eric Newman punches the numbers on his calculator and gapes at the results one more time.

It's no mathematical error: The federal government has proposed raising taxes on premium cigars, the kind Newman's family has been rolling for decades in Ybor City, by as much as 20,000 percent.

As part of an increase in tobacco taxes designed to pay for children's health insurance, the nickel-per-cigar tax that has ruled the industry could rise to as much as $10 per cigar.

"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."

Anyone who doesn't think such a tax would lead to job losses in the cigar making industry in Florida, as well as in the retail cigar industry across the nation is deluding themselves. Anyone who believes that tax revenues to the Federal government will increase as a result of such a tax is seriously misguided if not downright foolish.

The Democrats might believe they are dealing a mighty blow to rich fat cats straight out of the robber baron days of the 19th century, but they are really targeting average Americans and, especially, immigrants from central America and the Caribbean.

Lest we forget, these types of taxes can have devastating effects. Here is how the NewsHour summed up the luxury tax on yachts from the early 1990's.

The theory behind the luxury tax sounded simple enough. Congress believed anyone willing to spend $100,000 or more on a new boat surely would be willing to pay an additional 10 percent to the federal government. But that didn't happen. Rather than pay the tax, many people in the market to buy a boat either didn't buy one, or bought one overseas. As a result, the luxury tax didn't bring in much money at all, and the customers' reluctance to buy put the boat-building business, particularly here in Rhode Island, out of business. We first visited Rhode Island in June of 1992. The luxury tax had been in effect for 18 months. Tens of thousands of jobs had been lost across the country, thousands in Rhode Island alone.

I forget, how is this sort of thing a good idea?

(Gleaned from CQ)