Those cigarette taxes are sure working out, eh?

posted at 2:31 pm on December 15, 2012 by Jazz Shaw

Taking a break from the firestorm of sad news this weekend, let’s circle back and see how things are going in the states which have chosen to sin tax their way back to prosperity. First, my own home stomping grounds of New York, which has been seeking a way to stave off total fiscal collapse by jacking up one of the highest tobacco tax rates in the nation. How’s that working out for ya?

ALBANY – Chronic cigarette-tax evasion continues to cost New York State at least $1.7 billion a year in tax revenue and 6,700 jobs, according to a new report from the New York Association of Convenience Stores (NYACS).

Commissioned by NYACS, the economic study by John Dunham & Associates determined that in 2011, one of every two packs of cigarettes consumed in New York State escapes collection of New York State taxes. “This is further proof that New York, which has the highest cigarette excise tax in the nation, continues to suffer the corrosive economic and fiscal effects of the worst cigarette tax evasion in the nation,” said NYACS President James Calvin in a press release.

Their study finds that nearly half of the packs of smokes purchased in New York were “from other states, Indian reservations, duty-free shops, and military bases.” And that doesn’t take into account the number of smokers who are choosing to do their shopping with black market bootleggers who are increasingly prevalent in sections of the state which are further from the border. This has led to the “unexpected” result of more police resources being diverted to enforcement efforts, more people winding up in jail and more small businesses being swept up in the wreckage and disarray. In short, rather than soaking up more cash with this tax, New York is actually losing money on the deal. Who could possibly have predicted that?

But that’s just New York. We’re kind of weird out here anyway, right? So maybe this case is just an outlier. I’m sure things are working out much better in Chicago, where Illinois is quickly moving to catch New York in the smoke tax category. The money surely must be rolling in by now.

CHICAGO (CBS) – Cook County investigators have been raiding stores across the county that have been breaking the law, and ripping off taxpayers of millions of dollars, by selling cigarettes without proper taxes…

About 800 raids take place each month.

“Roughly a quarter of them result in confiscations,” Cook County Board President Toni Preckwinkle said.

“In the last fiscal year, it was a loss of $6 million,” she added. “$6 million would make a great deal of difference to our healthcare system, or to our criminal justice system.”

Chicago has at least found a way to make up some of the loss, giving credit where credit is due. To date they have managed to issue more than $1.3M in fines, largely against small retail outlets who sell cigarettes. So they’ve got that going for them I guess. And hey… they’re creating jobs, too.

The Cook County Department of Revenue has planned to hire even more investigators in 2013. The goal is to carry out even more raids, at night.

This is what we’re devoting our law enforcement resources to in the midst of all the other problems facing these states. Meanwhile, revenue is driven out of the state, businesses are beaten down and an entire new industry has cropped up for criminal networks in two places already famous for organized crime activity. Way to go, guys. Another fine product brought to you by your tax dollars at work.


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The answer is quite clear.

All states must jack up their taxes to equal New York’s.

Signed – Average Liberal Voter

ButterflyDragon on December 15, 2012 at 2:38 PM

Particularly smart is that most Dem-controlled megalopolises are jammed into tri- and tetra-state areas.

So the only effect of the cigarette tax is to create more pollution as people drive further to buy them.

ButterflyDragon on December 15, 2012 at 2:38 PM

That isn’t the least bit satirical, on any topic, sadly.

HitNRun on December 15, 2012 at 2:42 PM

It was a given. Everything has a price point after which the black market enters.

koaiko on December 15, 2012 at 2:42 PM

duh…if laws don’t work, legislate more comprehensive laws. Is logic foreign to the Right Wing?

Slade73 on December 15, 2012 at 2:43 PM

Wait a tic,I thought this was for the children!

canopfor on December 15, 2012 at 2:43 PM

This seems to be working out as good as the taxes on the ‘rich’ in these states? Tax something to the point people leave, get what they want someplace else? To solve this problem those in charge with not enough brain cells to rub together to make a spark, RAISE the taxes even more! Gotta love goverment don’t you?

BTW, bho is doing the very same thing with everything he is doing.
L

letget on December 15, 2012 at 2:44 PM

This seems to be working out as good as the taxes on the ‘rich’ in these states? Tax something to the point people leave, get what they want someplace else?

That’s why liberals hate freedom.

That is why they want the federal government supreme to all state laws and want more federal oversight on every aspect of our lives. To take away the freedom that allows one choice. They don’t want people to have choices, they want people to conform to their world view.

It’s sick.

ButterflyDragon on December 15, 2012 at 2:48 PM

what is that saying ‘Those who fail to learn from history are doomed to repeat it.’. the taxing officials in these area are textbook cases

RonK on December 15, 2012 at 2:51 PM

That’s why liberals hate freedom.

And I might add that is why they love the ‘agenda 21′ thing! Put the citizens in a controlled area where everyone has to do/rely on them for every little thing. Then freedom is really gone!
L

letget on December 15, 2012 at 2:55 PM

taxes are the bestest

they always work except when they don’t 90% of the time

Slade73 on December 15, 2012 at 2:59 PM

Their study finds that nearly half of the packs of smokes purchased in New York were “from other states, Indian reservations, duty-free shops, and military bases.”

Go Native Americans….

This reminds me when Bloomberg said he was going teach the Seneca Indians a lesson for not paying NY taxes on cigarettes on their reservations. Bloomberg said:

“I said to David Paterson, ‘You know, get yourself a cowboy hat and a shotgun.’”:

Needless to say the Senecas were not happy…I think they sued but I can’t remember what the final result was.

William Eaton on December 15, 2012 at 3:19 PM

Actually, we are reaping the benefits of Illinois tax rates here in Indiana.

Here in NW Indiana, where the state line borders the south side of Chicago, the gas station and cigarette store parking lots are full of cars with Illinois plates.

novaculus on December 15, 2012 at 3:20 PM

The mob has smuggled cigarettes into New York for years.

slp on December 15, 2012 at 3:21 PM

Nothing can be done about illegal aliens in Cook County, but they have the resources to conduct 800 raids a month to combat the black market for cigarettes.

Wigglesworth on December 15, 2012 at 3:25 PM

Not just cigarettes. Higher taxes on just about anything generates a black market or, as some refer to it, an ‘underground economy’.Thus we have a seeming paradox-higher taxes usually generate lower revenues. In the case of cigarettes the demand for CHEAPER cigarettes increases sharply-making it profitable for black marketeers to operate thus creating a huge spike in supply to meet this demand. Obviously when the demand and supply of cheaper cigarettes rise the demand and hence supply of more expensive cigarettes drop. Since NY State gets NO TAX AT ALL from the cheaper cigarettes, revenues drop. Elementary economics, my Dear Watson, which somehow seems to evade the fogged brains of liberal nincompoops.

MaiDee on December 15, 2012 at 3:32 PM

Ahh, the “central planners” Paul Ryan was talking about.

mmcnamer1 on December 15, 2012 at 3:33 PM

Maybe they can get Obama for keeping illegal Kools stashed in the White House.

justltl on December 15, 2012 at 3:34 PM

ALBANY – Chronic cigarette-tax evasion continues to cost New York State at least $1.7 billion a year in tax revenue and 6,700 jobs, according to a new report from the New York Association of Convenience Stores (NYACS).

Government logic. Raise taxes on something, then multiply the current number of items against the tax rate and claim it will raise x amount of dollars. When that fails to happen, claim “tax evasion” is costing the government y amount of dollars, where y is (the amount you hoped forthe amount you actually received). Then, of course, you spend more on law enforcement to catch those “tax evaders.” And of course, you only catch a percentage of them, then try to recoup by assessing huge fines which are still not big enough to make up the difference. All leading to either getting a fraction of what you expected, or even losing money overall on the higher taxes.

In this case, it’s a tax on cigarettes. But we’re all set to repeat the same dance with higher taxes on “the wealthy.” We already have people trying to convert assets into higher profit this year so they don’t get tagged with even more tax next year, and petty politicians accusing them of “gaming” the system. Also, Google funneling profits to be accounted for in lower tax regimes, and petty politicians screaming about that. Then you have the “death tax” that costs more to enforce than it makes in revenue.

The musicians change, but the band keeps playing.

There Goes The Neighborhood on December 15, 2012 at 3:35 PM

Apparently this is good news to liberals. Less jobs and now even more taxes to make up for their delusional economics.

pat on December 15, 2012 at 3:36 PM

I’d check out that bunker they had built a couple years ago.
I figured that’s where he goes to sneak a smoke.

justltl on December 15, 2012 at 3:36 PM

To be a Leftist is to be a willful evader of reality (evasion being the root of all evil), especially history:

In conclusion, the fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class–and its taxpaying capacity–were exterminated.”

ShainS on December 15, 2012 at 3:37 PM

This can’t be true. The left has been telling us for years that high taxes don’t alter behavior.

single stack on December 15, 2012 at 3:38 PM

I’d check out that bunker they had built a couple years ago.
I figured that’s where he goes to sneak a smoke.

Or whatever else comes up?
L

letget on December 15, 2012 at 3:39 PM

Whaddya mean not workin’ out? That $6 million in Crook County might have gone to the cabal of city aldermen and county officials who could be running the black market operations. They’re probablly in a smoke-filled back room somewhere right now divvying up the take. But regular cigarettes are small potatoes now for revenues. While da’ gubmints got the loser user-voters to approve decriminalized possession of pot to get the unwitting nitwit masses hooked and used to possessing, they’re working up all the licensing, regulation and taxation of the future sale of the munchie-causer and wait till they implement those procedures, laws and taxes, along with the new processed packages and cartons of pot cigarettes, to see what kinda cash da’ gubmints will be rakin’ in cuz da’ peoples gots ta’ have their fix. And as soon as the massive new demand kicks in, a new tax on munchies will get implemented. And then whole new black markets will have to be created.

stukinIL4now on December 15, 2012 at 3:50 PM

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http://video.msnbc.msn.com/nbcnews.com/50208642#50208642

canopfor on December 15, 2012 at 3:52 PM

I`m in NY, I`m an ex-smoker…interestingly enough, health reasons were not what made me quit, although I acknowledge just how bad cigs are for you I actually enjoyed smoking them but the price tag just got to be too much (good going libs). I still “smoke”….e-cigs(because I enjoy the physical machinations of the habit), better for your lungs and (so far) tax free, in fact it costs me approx 1/4 what I was spending on tobacco per month.

NY Conservative on December 15, 2012 at 3:57 PM

For those simpletons, the solution is … er ….simple. RAISE THOSE TAXES SOME MORE!

GarandFan on December 15, 2012 at 4:04 PM

This has led to the “unexpected” result of more police resources being diverted to enforcement efforts…

…no problem!…they’ll just expand the public payroll and hire more police…or divert them or other funds from public safety and then have a special millage request to then hire more police… so that you will have someone to respond to actual crimes.
In Detroit…for the longest time now…if you are assaulted…your home is broken into…your car is stolen…etc…”you have to come into the Precinct Station too report” that crime…it works wonders for municipal crime statistics!

KOOLAID2 on December 15, 2012 at 4:37 PM

All these taxes do is to remove spending and investing power from consumers and thus the economy at large, and put it into the pockets of politicians and their lobbyists.

Dr. ZhivBlago on December 15, 2012 at 4:45 PM

The Cook County Department of Revenue has planned to hire even more investigators in 2013. The goal is to carry out even more raids, at night.

Oh, isn’t that lovely? Yet another excuse to play storm trooper and conduct night raids. What could possibly go wrong?

This is what we’re devoting our law enforcement resources to in the midst of all the other problems facing these states. Meanwhile, revenue is driven out of the state, businesses are beaten down and an entire new industry has cropped up for criminal networks in two places already famous for organized crime activity. Way to go, guys. Another fine product brought to you by your tax dollars at work.

Well, after all, Chicago, being a gun-free city with strict gun laws pretty much has violent crime under control so this is a good use of those law enforcement resources that are no longer needed to fight crimes carried out against private citizens. /s /s

While Jazz correctly points out the rule that increasing taxes does not necessarily result in increased revenue, the corollary to that rule is that the government will devote whatever resources are necessary to protecting its revenue stream. Citizen safety is a secondary or tertiary consideration to that fact. Case in point: the requirement to poison industrial ethanol in order to make sure that the government does not lose a single penny of the alcohol tax revenue that is due it.

AZfederalist on December 15, 2012 at 5:35 PM

Draconian sin taxes have been pretty common throughout history – and indeed, only a step below prohibition. The results from such taxes and, for that matter, prohibition, are the same every time – the economy is hurt, law abiding citizens become criminals, and the real criminals make a fortune – just ask the Kennedys.

But, there is good news. Nanny statists get to sleep well at night, knowing they hold the moral high ground.

Wolf Howling on December 15, 2012 at 5:44 PM

Nothing can be done about illegal aliens in Cook County, but they have the resources to conduct 800 raids a month to combat the black market for cigarettes.

Wigglesworth on December 15, 2012 at 3:25 PM

Illegals don’t pay taxes; cigarette smokers do.

davidk on December 15, 2012 at 5:49 PM

And I might add that is why they love the ‘agenda 21′ thing! Put the citizens in a controlled area where everyone has to do/rely on them for every little thing. Then freedom is really gone!
L

letget on December 15, 2012 at 2:55 PM

http://whatisagenda21.net/

davidk on December 15, 2012 at 5:50 PM

Going up against mostly lawful small businesses is much, much safer than heading into those communities organized by Obama where there are illegal guns killing tens of people every weekend.

jukin3 on December 15, 2012 at 5:53 PM

According to the commericals in NY I’ve seen the purpose of the tax isn’t to penalize people or get more money, it’s to save people by taxing them into quitting. /

rjl1999 on December 15, 2012 at 5:58 PM

According to the commericals in NY I’ve seen the purpose of the tax isn’t to penalize people or get more money, it’s to save people by taxing them into quitting. /

rjl1999 on December 15, 2012 at 5:58 PM

Uh, yeah, that’s why they are spending so much on the enforcement effort.

Sad thing is that there are people in NY and elsewhere who really believe what you wrote. There really are people who worship the state and believe that everything it does is for their good.

AZfederalist on December 15, 2012 at 6:03 PM

Punitive sin taxes may be hazardous to your fiscal health.

MJBrutus on December 15, 2012 at 6:10 PM

The biggest joke is the State Governments that calculate revenue of added tax and spend it before they count up their receipts. NYC did this when they raised the tax on millionaires and a couple of thousand of them moved out of the city and when they counted up the tax monies they were very short of what they calculated and to add insult to injury they had spent the money already, naturally they claimed a loss. Back in the seventies there was a big push to lower our thermostats to conserve energy and many did just that and then the electric companies hollered that they were loosing revenue so the government allowed them to raise their rates to compensate, so much for saving energy and continue wearing sweaters in the house.

mixplix on December 15, 2012 at 6:17 PM

mixplix on December 15, 2012 at 6:17 PM

Liberals can never comprehend a simple fact. Taxes alter the way people behave.

MJBrutus on December 15, 2012 at 6:19 PM

I p[ayed up for cigarettes for a very long time but when Barky got in and jacked the feral govenrment end of the tax up … AGAIN, I said that was it. I cut down my smoking from 2 packs a day to half a pack and then I finally got “off the cigarette grid” and do MYO now. Totally legal. $1.30/pack. Better tobacco. And the governments (all of them) can suck air on the taxes they no longer get from me. It’s a shame I didn’t switch years before. I buy dual-use tobacco which is taxed as pipe tobacco, not cigarette. I’m sure they’re going to clamp down on that soon enough so I have years worth of tobacco, already. Works for me and I feel even better starving this evil set of loons of the tax money.

ThePrimordialOrderedPair on December 15, 2012 at 6:22 PM

ThePrimordialOrderedPair on December 15, 2012 at 6:22 PM

Lots of people here buy from the Indian Reservations. Still pay the federal tax, but no state and local taxes.

AZfederalist on December 15, 2012 at 6:27 PM

ThePrimordialOrderedPair on December 15, 2012 at 6:22 PM

You can always grow your own. Some do in my State.

pat on December 15, 2012 at 6:29 PM

Lots of people here buy from the Indian Reservations. Still pay the federal tax, but no state and local taxes.

AZfederalist on December 15, 2012 at 6:27 PM

For pre-made cigarettes, that’s the easiest, but the Indians are still far more expensive than MYO. The Indians raise their prices to stay competitive with regular prices but not too cheap. Same for the patches and electronic cigarettes. They seem to price them based more on how much smokers are being ripped off for regular cigarettes than independently. That’s okay. Business is business. But, like I said, for me it’s $1.30 a pack (though I have to make the cigarettes) and that can’t be beat anywhere.

I still applaud those buying from the Indians and at least starving some of the governments of the tax extortion.

BTW, for my tobacco, tax on a pound (which is a bit over 2 cartons worth of cigarettes) is something like $1.80 because it’s classified as “pipe tobacco”. Tax for a pound of the same tobacco cut for cigarettes (as the cut is the only difference) is upwards of $28. So I pay a total of less than $16 for a poujnd of tobacco while the tax on cigarette tobacco is more than that on its own. It’s beyond ridiculous. And then the pr!cks won’t even let us smoke anywhere, anyway. They are just nasty, nasty people.

ThePrimordialOrderedPair on December 15, 2012 at 6:34 PM

You can always grow your own. Some do in my State.

pat on December 15, 2012 at 6:29 PM

That’s doable, though it’s A LOT of extra work. I don’t mind constructing the cigarettes, but that’s enough for me. I’m sure that the idiots in government (all the governments) will eventually make it so that growing tobacco is the only sane way, but at least we’re not there quite yet.

ThePrimordialOrderedPair on December 15, 2012 at 6:38 PM

No state is an island. It’s always easier to go somewhere else. So the solution must be to make all the states have the same taxes, right? So there aren’t any islands.

Wait. Some places are. And guess what? It doesn’t work on an island like, say, Hawaii or Puerto Rico.

Couple years back, our lovelies in the statehouse sharply raised sin taxes. Save the children, fix roads and bridges, police and fire fighters and all that. Result? Our largest shipping company is facing a huge Federal indictment for looking the other way as people stuffed the ships with “illegal” cigarettes. Discovered, of course, when someone opened the trunk of their new Nissan to a lifetime supply of smokes from China.

JoseQuinones on December 15, 2012 at 6:42 PM

You can always grow your own. Some do in my State.

pat on December 15, 2012 at 6:29 PM

Seems like some other folks at one time started finding ways to make their own product because of onerous taxes. Only that time it was tea. Didn’t end well for the taxing entity.

AZfederalist on December 15, 2012 at 6:43 PM

Cigs were 20 cents a pack when I started, about a buck when I quit. Price didn’t get me to stop… Turns out I like tasting food, and not coughing all the time.

I love/s the fact that Obama’s first tax increase was on tobacco… The working poor and their children took the biggest hit on that (broken promise #1). Taxing sins is a trick that money hungry politicians pull… In Barry’s case it was him publicly proving his adoring followers are morons.

RalphyBoy on December 15, 2012 at 6:44 PM

Let’s tax abortions – that way we can find a tax that Democrats HATE!

Wander on December 15, 2012 at 6:45 PM

I love/s the fact that Obama’s first tax increase was on tobacco… The working poor and their children took the biggest hit on that (broken promise #1). Taxing sins is a trick that money hungry politicians pull… In Barry’s case it was him publicly proving his adoring followers are morons.

RalphyBoy on December 15, 2012 at 6:44 PM

… and yet the flippin’ morons voted him back into office. This is just maddening.

AZfederalist on December 15, 2012 at 6:50 PM

The lessons of history are so clear for those who care to pay attention. Example: the modern Mafia would not exist today except for Prohibition, the idiotic constitutional amendment that literally created a market for bootleg liquor and rescued a dying glorified Italian mens’ club from obliteration.

Books have been written about the Law of Unintended Consequences — the only kind central government fosters. More books should be written.

Humphrey on December 15, 2012 at 7:13 PM

Illegals don’t pay taxes; cigarette smokers do.

davidk on December 15, 2012 at 5:49 PM

Also, going after illegals is pointless when they can literally turn around and walk across the border in a day with almost no opposition from American border patrol.

I’m not defending their foolishness but seriously, what’s the point?

MelonCollie on December 15, 2012 at 7:37 PM

Example: the modern Mafia would not exist today except for Prohibition

Humphrey on December 15, 2012 at 7:13 PM

ROTFLOL. That BS pothead lie again.

The mob existed long before booze was banned and it would still exist if beer and the knowledge to make it literally vanished overnight.

MelonCollie on December 15, 2012 at 7:38 PM

Not just cigarettes. Higher taxes on just about anything generates a black market or, as some refer to it, an ‘underground economy’.Thus we have a seeming paradox-higher taxes usually generate lower revenues. In the case of cigarettes the demand for CHEAPER cigarettes increases sharply-making it profitable for black marketeers to operate thus creating a huge spike in supply to meet this demand. Obviously when the demand and supply of cheaper cigarettes rise the demand and hence supply of more expensive cigarettes drop. Since NY State gets NO TAX AT ALL from the cheaper cigarettes, revenues drop. Elementary economics, my Dear Watson, which somehow seems to evade the fogged brains of liberal nincompoops.

MaiDee on December 15, 2012 at 3:32 PM

I think this would also happen if the so called “Fair Tax” were introduced.

Dasher on December 15, 2012 at 7:49 PM

I think this would also happen if the so called “Fair Tax” were introduced.

Dasher on December 15, 2012 at 7:49 PM

As opposed to what we have now, fool?

MelonCollie on December 15, 2012 at 7:51 PM

Cook County investigators have been raiding stores across the county that have been breaking the law, and ripping off taxpayers of millions of dollars, by selling cigarettes without proper taxes…

About 800 raids take place each month.

’800 raids per month’.

26 ‘raids’ per day average.

BULLLLLLLL crap.

They haven’t the funds nor the man-power nor even the time to carry out 26 raids per day every month — month after month after month — for something as asinine as bootleg cigarettes.

Get outta town!

Maybe 8 raids per month. 2 per week. Maybe

Such a load. If you’re going to employ the tactic dujour of our present Government in an effort to scare people into compliance — at least LIE within the realm of believability.

SD Tom on December 15, 2012 at 8:40 PM

Cook County investigators have been raiding stores across the county that have been breaking the law, and ripping off taxpayers of millions of dollars, by selling cigarettes without proper taxes…

It’s funny how the media always look at foregone tax revenue as “ripping off” the state, instead of noting that taxpayers benefit from lower taxes.

(Yeah, the writer tried to cloak his meaning with that “ripping off taxpayers” krep, but that’s obviously not what he meant.)

Paul_in_NJ on December 15, 2012 at 10:11 PM

’800 raids per month’.

26 ‘raids’ per day average.

BULLLLLLLL crap.

They haven’t the funds nor the man-power nor even the time to carry out 26 raids per day every month — month after month after month — for something as asinine as bootleg cigarettes.

SD Tom on December 15, 2012 at 8:40 PM

Oh my gracious…that IS nuts! Thanks for doing the math for us!

MelonCollie on December 15, 2012 at 10:21 PM

Not just cigarettes. Higher taxes on just about anything generates a black market or, as some refer to it, an ‘underground economy’

MaiDee on December 15, 2012 at 3:32 PM

I can hardly wait for the “Health Easy” clubs which Obamacare will creeate!!!

Imagine:

Hey mister…wanna see my sister??? She’s Internal Medicine!!! My other sister does eye exams!! And Guido’s got your drugs: just go to the back of the liquor store and ask for some of the “Special Label” stuff!!

landlines on December 15, 2012 at 10:32 PM

Thank you for covering this story Jazz!!

Dollayo on December 15, 2012 at 11:09 PM

After reading this story I wonder what’s the difference between cigarettes and weed? And why should be keep weed illegal again?

LouisianaLightning on December 16, 2012 at 11:02 AM

Stage raids against tobacco sellers. Again, slamming small business. At the same time, the Feds ignore states legalizing marijuana. Our country is so far gone. Paul Harvey, 1965 If I was the Devil. Satan just keeps on keepin’ on.

daveweber on December 16, 2012 at 11:03 PM

Government forgets that mobility is much better than many years ago. People have a greater capacity to go where the tradeoffs between time and differential costs are acceptable.

How else can Safeway FLY milk into my state and sell it for cheaper than locally produced milk? Surely if they had to put it on a ship and take 7-10 days to get it here that the tradeoffs for price and freshness might shift a lot.

Politicians also presume that demand is inelastic — that irregardless of price (i.e. taxes) the demand will remain the same — perhaps the demand might remain the same but where the demand goes to get the item will likely shift to some extent and ease of transportation has a role to play.

Russ808 on December 17, 2012 at 3:45 PM