Open letter to President Obama (Part 466)
(Emailed to White House on 4-9-13.)
President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500
Dear Mr. President,
I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.
When I see taxes go up then I expect to see people try to avoid paying the higher taxes. Why can’t liberals see that is going to happen? Look at this stats below.
Cigarette butt, to be more specific.
All over the world, governments impose draconian taxes on tobacco, and then they wind up surprised that projected revenues don’t materialize. We’ve seen this in Bulgaria and Romania, and we’ve seen this Laffer Curve effect in Washington, DC, and Michigan.
Even the Government Accountability Office has found big Laffer Curve effects from tobacco taxation.
And now we’re seeing the same result in Ireland.
Here are some details from an Irish newspaper.
…new Department of Finance figures showing that tobacco excise tax receipts are falling dramatically short of targets, even though taxes have increased and the number of people smoking has remained constant…the latest upsurge in smuggling…is costing the state hundreds of millions in lost revenue. Criminal gangs are openly selling smuggled cigarettes on the streets of central Dublin and other cities, door to door and at fairs and markets. Counterfeit cigarettes can be brought to the Irish market at a cost of just 20 cents a pack and sold on the black market at €4.50. The average selling price of legitimate cigarettes is €9.20 a pack. …Ireland has the most expensive cigarettes in the European Union, meaning that smugglers can make big profits by offering them at cheaper prices.
I have to laugh at the part of the article that says, “receipts are falling dramatically short of targets, even though taxes have increased.”
This is what’s called the Fox Butterfield effect, when a leftist expresses puzzlement about something that’s actually common sense. Named after a former New York Times reporter, who was baffled that more people were in prison at the same time that crime rates were falling, it also shows up in tax policy when statists are surprised that tax revenues don’t automatically rise when tax rates become oppressive.
Ireland, by the way, should know better. About the only good policy left in the Emerald Isle is the low corporate tax rate. And as you can see in this video, that policy has yielded very good results.
The Laffer Curve, Part II: Reviewing the Evidence
My favorite example from that video, needless to say, is what happened during the Reagan years, when the rich paid much more to the IRS after their tax rates were slashed.
P.S. You won’t be surprised to learn that a branch of the United Nations is pushing for global taxation of tobacco. To paraphrase Douglas McArthur, “Bad ideas never die, they become global.”
This fellow in the cartoon below will not stick around to pull the sled will he?
You can see one of my favorite political cartoons, produced by Chuck Asay, by clicking this link. It shows how a burdensome welfare state undermines growth by creating too heavy a load for the economy to carry.
Here’s a Lisa Benson cartoon that makes a similar point, but it focuses on Obama’s class-warfare tax policy.
What makes the cartoon especially effective is that it not only shows that higher tax burden is designed to finance more spending, but also it makes clear that soaking-the-rich won’t be enough.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, email@example.com