The wages of sin (taxes) again

posted at 10:05 am on October 6, 2011 by Jazz Shaw

Ah, politicians and their sin taxes. It’s like kids with big bags of candy the day after Halloween… they just can’t help themselves. When they want to raise revenues but fear the wrath of the voters, the surest path to some quick cash has traditionally been taxing “bad things” which will raise the least objections from the populace. (Why they don’t simply outlaw these things if they are so “bad” is never explained.) But does it actually produce the desired effect of bringing more money into the government’s coffers?

This experiment has been running for some time now in Cook County, on the outskirts of Chicago. Intrepid county politicians decided to cash in on the sin tax craze back in 2006, going after smokers by tacking on a fee of ten cents per cigarette. (Or two dollars per pack.) This has had some predictable, if disappointing results.

In 2006, the county collected about $200 million in cigarette tax revenue, but that dropped to about $126 million last year.

“There’s probably some people who have given up smoking, but I don’t think that accounts for $74 million (less),” [Sheriff Tom] Dart said.

When you increase the tax burden sufficiently on anyone, some will abandon the activity, but for many others they will eventually find ways around it. In this case, both smokers and businesses have begun exploring the increasingly lucrative black market trade for smokes. So much so, in fact, that the county is now spending even more resources and money to chase down the scofflaws and pay out “snitch fees” for people to turn in their neighbors.

Chicago-area stores profiting from under-the-table cigarette sales may see that business plan go up in smoke.

That’s because Cook County is stepping up enforcement of its $2-a-pack cigarette tax, offering rewards of up to $1,000 to anyone whose information that a store is skirting the tobacco tax leads to arrests, county board President Toni Preckwinkle and Sheriff Tom Dart announced Friday.


After beefing up the investigative arm of the county revenue department and bringing sheriff’s officers in to assist in recent weeks, the county has hit some stores with more than $400,000 in fines for those selling cigarettes under the tax radar. In all of 2010, $1.6 million in fines were levied.

So let me get this straight. By implementing a sin tax to bring more money in, you’ve managed to not only slash the amount of revenue you’re collecting nearly in half, but the taxpayers also have to lay out thousands of additional dollars to pay a bounty for folks to turn in neighborhood stores and residents? Plus, as a bonus, you’re hammering the small businesses in the area far more than any huge corporate behemoths.

Genius. I would say, “only in Chicago,” but sadly this is going on all over the country.

UPDATE: Our friend Steve Eggleston points out in the comments that Wisconsin is pulling a similar maneuver, cracking down on “roll your own” shops. With the massive price increases on commercial brands, many smokers have taken to purchasing loose tobacco and rolling papers / machines to produce their own at less than half the cost. The government is now apparently going after them as well to make sure no smoker goes unfleeced.

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Vanceone on October 6, 2011 at 1:41 PM

Your post is a textbook-ready example of the use of “straw man” arguments…
…arguments which Jason Coleman neither made nor implied.

The question on the table is essentially “Is the use of taxes for the purpose of coercion, rather than revenue-raising, valid and/or useful?”

I join those who say NO: taxes used in this way are inefficient, ineffective, and cause massive waste of resources in both the public and the private sector. If you want to outlaw behavior, outlaw it and then use the justice and law enforcement organizations as they were intended to be used…rather than forcing tax collectors and armies of accountants to do a job they are ill-equipped to perform.

landlines on October 6, 2011 at 4:44 PM

Note that they have driven people from the arguably healthier option of commercial filtered cigarettes to roll your own without filters. That seems to be contrary to publicly stated purposes for the tax, health improvement, reducing costs for smoker’s healthcare, and raising money to pay for it. Only politicians could be this stupid.


herself on October 7, 2011 at 6:14 AM

Stupid liberals always think that tax increases bring in more revenue. That is only true to a certain point. Once a “breaking point” has been reached, further tax increases actually REDUCE revenues because liberals have never heard of human resourcefulness or of the “underground economy”.

MaiDee on October 7, 2011 at 8:46 AM

Get people off of the tobacco habit, and then we can ban it.

Vanceone on October 6, 2011 at 10:53 AM

why should we as a society encourage and support consumption of alcohol and tobacco, and celebrate it, instead of tolerating it as a necessary evil that hopefully will someday not matter as no one participates?

Vanceone on October 6, 2011 at 1:41 PM

So you think banning something is tolerating it as a necessary evil now… can I ask where you got your dictionary? Can I recommend a new one?

And if no one participates in the future you don’t need a ban… but you want a ban to force people to not participate in things you don’t approve of…

You have the freedom to choose, but not the freedom to then ignore the consequence of your choice. … People function best when self governed.

Vanceone on October 6, 2011 at 12:54 PM

And people are best “self-governed” when you’re banning things they shouldn’t be doing, right? They can only “self-govern” when you are the ones deciding their choices without their input, only allowing the proper ones, and banning all the “bad” ones.

In the future, can I just talk to your personality that wants to stay out of my choices, accept “necessary evils” and allow people to be self;governed, and not the personality that wants to ban everything bad, control people, and have the government make minute decisions for every citizen?

If you don’t have multiple personalities warring for control over your keyboard; you’re doing a fine impression of someone who does.

gekkobear on October 8, 2011 at 12:31 AM