The Radio Equalizer: Brian Maloney

18 July 2007

Rush Limbaugh, Cigar Tax Increase, Talk Radio


Proposed Increase Could Target Talk Titan, Cigar Industry

Have Democrats in Congress finally found a way to tax Rush Limbaugh directly?

With a whopping 20,000% cigar tax increase on the agenda, the answer appears to be yes. More than that, their proposal appears aimed at reviving the very sort of class warfare they've been known for in the past. Cigar smoking is generally considered to be favored by the wealthy.

In the meantime, however, how will small business be hurt by what could be the biggest tax hike in American history? From James Thorner in the St Petersburg Times:

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."

When it comes to tobacco sales, cigars are just a speck compared to cigarettes. In 2006, the nearly 400-billion cigarettes sold domestically dwarfed the 5.3-billion cigars.

But cigars are intertwined with Tampa's lineage.

Though the local industry has shriveled from foreign competition and domestic consolidation, cigarmaking still employs more than 1,000 in Tampa. About 900 work at the factory, offices and warehouse of Hav-a-Tampa, owned by foreign tobacco giant Altadis.

Newman machine-makes 35,000 cigars a day at 16th Street and Columbus Avenue and imports hand-wrapped varieties from Latin America. He estimates Florida makes or imports 80 percent of the cigars consumed in the United States and predicts devastation if the new taxes are approved this summer.

Many casual smokers are well heeled enough to plunk down $10 for a premium puff. But would they pay $15 to $20 for the same pleasure?
"Why don't we just go out of business?" Newman said. "Here, you can run our company, Mr. Government."

Here's the source of the controversy: The Democrat controlled Congress has sought an extra $35-billion to $50-billion for the state children's health insurance program. The program distributes payments to the states to help buy coverage for kids not poor enough for Medicaid.

Cigarettes, which accounted for more than 95 percent of tobacco tax collections last year, are the main focus of the bill. Federal taxes on a pack would jump from 39 cents to $1.

But the legislation has dragged cigars along for the ride. The industry operates under a 4.8 cents-per-cigar tax cap.

Under the proposed bill, taxes on "large cigars," a category that includes all but the tiny cigars sold in 20 packs like cigarettes, would rise to 53 percent.

A U.S. Senate version of the bill under consideration today in the Finance Committee sets the maximum tax per cigar at $10.

"We are a very small industry. We're the fly. The cigarette industry is the elephant as far as tax collections are concerned," Newman said. "We've been roped in with conglomerates that own cigarette companies."

As talk radio and cigars have long had a close association (there is even a cigar talk show that airs on weekends), Limbaugh's friend is right on the money here:

RUSH: It's for the children. In the name of saving the children, big government has targeted yet another industry to destroy.

CALLER: So the Winston Churchill that I just started smoking cigars with is going to go from $10 to $20 each.

RUSH: Oh, I know. The maximum cigar tax will be $10 a cigar. It's now at 5¢. The cigar industry as a percentage of the whole tobacco industry is like 2%, if that. This cigar tax increase is sort of hidden in here. Well, it's not hidden anymore, but the bill is written to make it look like it's really a tax that's targeted on cigarettes. The tax on cigarettes will go up a dollar a pack from what it is now -- and the cigar thing is even worse, from 5¢ to $10 -- to pay for kids' health care. Cigars have long been ignored as a source of revenue because compared to cigarettes and other tobacco products, there aren't that many of them sold. Somebody has figured out here that there's a whole lot of money to be made. Children's health care?

I thought the tobacco settlements and all the taxes now were used and being directed to children's health care programs. I guess this is children's insurance. There's also -- and I'm not sure about this. The markup on this bill is still happening, but I think, in addition to the $10 a cigar tax, which is going to people these people out of business. It will be like the thing they did on the yachts, the luxury tax.

It'll put these people out of business. People will go elsewhere to find cigars. They'll find 'em. They'll find a way to do 'em. They'll find a way to get 'em to avoid paying this US tax. I'm still checking this out, but I think in addition to the per-stick tax, manufacturers as of January '08 next year, if this thing becomes law, are going to have a 50% tax on their current inventory that's all on the floor of the warehouse, before it gets to the retailers. I'm still checking this, but this is one of the bullet points that I got from somebody who analyzed the bill. So if a cigar company has a million dollars in inventory cigars, then before those cigars can leave for retail he has to pay $500,000 to the United States Treasury -- and this is Democrats, folks. This is who they are. I was telling somebody about this last night. They said, "Why are they doing this?"

"They're Democrats! They raise taxes."

This friend said, "No, this is aimed at you. You're the best known cigar smoker in the country. This is like the Limbaugh tax."

It's more than that. These people are trying to put the tobacco business out of business without doing it via legislation under the guys of doing it "for the children." This is what liberalism is. This is what Democrats do. They target businesses that they don't like and they use government to harm 'em, maybe even destroy 'em.

For now, legislation like this might not stand a chance, because Bush will probably veto it. But cigar fans really might want to consider stocking up in advance of the 2008 election.

When this does eventually become law, it's hard to even imagine how many will be smuggled across the border, especially from Canada, where cigar shops catering to Americans are quite common. No doubt the shopkeepers in British Columbia can't wait for this tax hike to be enacted!

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  • "Why don't we just go out of business?" Newman said. "Here, you can run our company, Mr. Government."

    Sounds like a good idea to me! Go out of business! Your stupid product is carcinogenic! Why don't you something constructive with your life and your capital?

    It says that Tampa has 1000 people employed making cigars. That's not a huge amount. They can do something else with their lives.

    And you think there's going to be a Boston Cigar Party? Yeah right. I don't see cigar smokers getting out of their Mercedes or Lexuses to protest in public in any way, shape or form. That's not their style.

    No, they will either buy some more lobbyists or just bitch and pay the extra tax. And paying for health care for children is the main point. The fact that makes being against this tax politically harsh is just some nice icing on the cake, not the main point.

    By Blogger Scott, at 18 July, 2007 13:14  

  • All this shows is that Rush is a cheap bastard, he is essentialy whining, although it is funny.....

    By Blogger Jared, at 18 July, 2007 13:26  

  • "Sounds like a good idea to me! Go out of business! Your stupid product is carcinogenic! Why don't you something constructive with your life and your capital?"

    "It says that Tampa has 1000 people employed making cigars."

    So in order to "save the children" people are willing to though 1000 worker's children under a bus by putting them out of business.

    Look, yea tobacco is bad for you, but their is a demand for it and these are just people who are contributing to the economy and put some food on the table to feed their kids and now you wanna kick them in their teeth because you don't like smoking well WAHHHH POOR ME!

    Now I'm not a left or right winger, i'm a die hard libertarian, and I am a cigar smoker and I makes less than 32,000 a year. I smoke about 1-2 cigars a month average. Sure it's not good for me but I enjoy it, and damnit, I live in America and i should have the freedom to do it with out blood sucking taxes turning my about 10-20 a month habit into a 30-40 habit. Like most Americans I'll just avoid the tax by ordering overseas or from Canada.

    "All this shows is that Rush is a cheap bastard, he is essentialy whining, although it is funny....."

    As much as I hate Rush, i hate that comment. Why should we have to pay a 20,000% tax increase on anything? It's not about being cheap, it's about being raped. What the hell has government ever done to deserve a copper penny from me?

    By Blogger Internet Jim Jesus, at 18 July, 2007 15:27  

  • Lib’s never seen a tax they didn’t like.

    Raise taxes on cigars who’s it going to hurt not Rush. So a few people lose their job screw them let them find another job.

    Raise taxes on corporate America. Only a few will lose their job. Screw them.

    At least this tax does not affect me directly.

    By Blogger pf1, at 19 July, 2007 00:36  

  • PF1

    Raise taxes on corporate America. Only a few will lose their job

    huh? You sound like you were dropped on your head.

    Look what tax cuts have done, tax cuts for corperate America has done nothing but make them richer as they outsource all of our jobs.
    Keep pandering to the elite, you are indeed functionally retarded

    libs libs libs,
    how old are you PF1? 10? you sound like pretty f*cking stupid.

    conservatism has cost millions of American their jobs and lowered their income............ Union busting, deregulation, outsourcing, the key elements of conservative ideology.... You being a retarded Reganite has cost Americans jobs, not a cigar tax, YOU and your loyalty to a business over people, profits over people ideology, has murdered Americans.......

    So let me get this st8, for 20 years the right has given HUGE tax cuts to corperate America and eliminated many fair trade laws ans tariffs on imports.... as a result the jobs have gone to India and South America, and contarded PF1, is whining about a cigar tax???

    Cons are ruining America. Their retardation is actually suffocating this nation.

    By Blogger Jared, at 19 July, 2007 09:33  

  • I complain about all taxes. If the government (Conservatives and Liberals) were more financially responsible I would not complain.

    Raise tax on a company and all they do is add it to the price of what ever they sell. The answer is not raising taxes it is to reduce government spending.

    FACT: The consumer always pays a tax increase.

    FACT: The consumer pays for “free healthcare”

    Nothing in life is free. Wake-up America before we end up like France.

    By Blogger pf1, at 22 July, 2007 01:05  

  • Scott, you are an idiot. If I want to smoke a couple of cigars once in awhile it is my right. A 20,000% tax increase is ludicrous. And just who in the hell are you to tell someone what kind of business to run to be "constructive" or what to do with their capital? Are you from the old soviet bloc or maybe your from cuba where the state tells you what to do or be.. Maybe those 1,000 people like rolling cigars for a living. Why dont you take your liberal ass to canada or something? or maybe you could just eat sh*t and die.. ass munch

    By Blogger kfd211, at 25 July, 2007 18:04  

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