Tax that Man Behind the Tree

"Don't tax me and don't tax thee. Tax that man behind the tree." That's an old colonial barb on taxation, whose paraphrase is commonly attributed to former Senator Russell Long (D-LA). However, this old barb rediscovered a newfound popularity in the 20th Century, continuing on into the 21st Century.

Hello. I'm one of those people behind the tree - a person who, for better or worse, has chosen to smoke cigarettes. True, I'm not alone. Many people across the country choose to smoke cigarettes as well. But ultimately, we smokers are a minority. And because we're a minority, we're an easy target at the ballot box when politicians need revenue to fund projects ... some worthy ... some not so worthy ... but mostly none that are directly related to smoking's negative effects.

To keep things simple (and local), I'm only going to speak about my home state - Oregon. As of July 1st this year and out of the 51 domestic tax zones in this country (50 states plus D.C.), Oregon's cigarette tax is $1.18 per pack - ranking it as the 20th highest cigarette tax in the country. But next month, Oregon voters will vote on "Measure 50" - a new tax levy on cigarettes. If it passes, Oregon's new cigarette tax will be $2.01 per pack - ranking it as the 4th highest cigarette tax in the country. In case anyone's curious, the highest cigarette taxes are paid in New Jersey ($2.58 per pack) and the lowest in South Carolina (7 cents per pack).

The purpose behind Measure 50, according to supporters, is to fund a "Healthy Kids" program - guaranteeing basic health care for uninsured children. Now, supporters of the measure haven't mentioned the definitive link between smoking and uninsured children ... so I'll just guess that there is none. And, these supporters (undoubtedly all of whom are non-smokers or anti-smokers) are trying very hard to convince all Oregonians to fund it by taxing "that man behind the tree" ... who, by virtue of his minority status, cannot hope to prevail if supporters succeed.

Or can he?

In our history, many people have found themselves behind the tree ... confronted by taxes they could not control. Once in our history, a group of them decided they'd not only NOT pay a tax, they'd throw a party to celebrate. It came to be known as the Boston Tea Party. Also in our history, one man felt he'd become the victim of unfair taxation. So, he chose not only to NOT pay the tax, he wrote a book on the "duty" of citizens to show "civil disobedience" toward unfair taxation. His name was Henry David Thoreau.

In the 21st Century, however, the worm is slowly turning ... this time in favor of those behind the tree. And the last laugh is slowly coming to rest on the group of people who dare to unfairly tax them. We've had other cigarette tax hikes in Oregon. And the last tax hike had its own set of promised revenue goals. However, two years after the last tax hike passed, the Oregon Department of Revenue admitted they were faced by a $150,000,000 shortfall in projected cigarette tax revenue. And no, this isn't because a bunch of smokers quit, either. The Department of Revenue knows why this shortfall exists ... and they know where the money has gone ... but they're hamstrung in their attempts to get their hands on the money.

A Federal law requires all U.S. tobacco retailers who ship tobacco out of state to notify state tax authorities of the shipments, giving tax authorities the names and addresses of customers in their respective states. However, there is a loophole in that law ... a treaty signed by the United States government granting an exclusion from this requirement to the 10 sovereign Native American tribes of the Seneca Nation in New York State.

In short, a growing number of Oregon smokers now order their cigarettes from out of state sellers. Occasionally, you hear of some smokers being "caught" and forced to pay back taxes. But these are just the unfortunate few who ordered cigarettes from sellers not affiliated with the Seneca Nation. While there are a number of mail order and online sellers who will sell and ship cigarettes, only the Seneca Nation sellers are exempt from reporting requirements ... and only as long as they sell a native brand, shipped from native land, and sold by a native seller affiliated with the 10 tribes. Caveat Emptor, for sure. Not all online and mail order sellers are created equal.

But, the majority of Oregon smokers have wised up to the rules. They buy and will continue to buy only from Seneca Nation sellers. And if the Department of Revenue calls a seller on the phone and asks for customer names and addresses, the seller will just tell them to go climb a totem pole.

Sadly, I think this whole situation could have been avoided. I do not think that smokers are inherently prone to be tax dodgers. States have taxed cigarettes for a very long time. But only in recent memory have taxes risen to such a level that the taxes exceed the cost of the product itself. Name one other legal commodity sold in this country where this is true. You can't ... because there isn't one. And insofar as cigarettes themselves are concerned, name one state where at least half of all cigarette tax revenue is earmarked to cover the smoking-related costs to the state. Again, you can't ... because there isn't one.

Any person who cannot see the unfairness of taxing any commodity beyond the value of the commodity ... or any person who cannot see the unfairness of earmarking tax revenue from a commodity to programs unrelated to the commodity ... is not only selfish, but blind. And anyone who cannot understand why smokers choose to protest their unfair taxation with civil disobedience toward the tax law(s) has no understanding or appreciation of basic human dignity.

As long as cigarette taxes continue to rise beyond the cost of the cigarettes themselves ... and as long as taxing authorities continue to earmark tobacco tax revenue for non-tobacco-related pork-barrel projects ... smokers will continue to defect from local sellers to sellers on Seneca Nation land. And once they go, they're gone for good. Right now, the price I pay for my favorite brand (shipping charges included) is less than half I'd pay locally. Do you think another cigarette tax hike will really increase revenue income ... or will it instead increase the revenue shortfall as more and more smokers defect?

In closing, I just wanted to share a humorous parting shot. A blog site I ran across recently crowed its support for Measure 50. And the blogmaster arrogantly said that people who don't think Measure 50 will pass are "certainly smoking something." My reply to him was simple - that persons who seriously believe that Measure 50 will actually enhance revenue after the last cigarette tax hike generated a $150,000,000 revenue shortfall were "certainly smoking something better."

Oh yes, and by the way, if worse comes to worse and the United States government decides to abandon their treaty obligations with the Seneca Nation, I personally have a "Plan B" to fall back on. A good friend of mine, a non-smoker, lives in South Carolina (remember, only 7 cents a pack there). He said he'd gladly mail me cigarettes anytime I wanted them. So far, tax-free cigarettes are cheaper. But, there's always the remote possibility that the government will go back on their treaty obligations - something the U.S. government has had a lot of practice doing in the past.