Thursday, December 22, 2005

What's to be said about the feetax? 

Much of what is to be said, David already did. Particularly on what is seen and what is not seen (Bastiat should be on that reading list.)
First of all, it was the smokers who got reamed, and they won�t see a dime of this money. I assume it will be rebated back to the distributors, who will pocket it, as is their right.

Secondly, as far as I can tell, while this ruling strikes down the HIF on cigarettes, the so-called "other tobacco products" (OTP) will still be subject to the increased fee. So cigars and snuff, for instance, still have to suffer under a 100% increase in their taxes, while cigarettes will go back down to prior levels. Of course, cigarettes are by far the most dangerous of these products, although studies show that smokers already more than pay their fair share in taxes.

David goes on through the expected political analysis -- Gov. Pawlenty made a bad mistake; don't compound it with the threat to administratively shift the fee onto retailers; best to make lemonade out of these lemons by letting the fee die; we don't need the money with the surplus.

Fine. Cigarettes will be cheaper, but you still won't have any place to smoke them.

Here's what it won't do, though. It won't change the level of government spending. Indeed, it shouldn't be long now before we hear the lament from education officials that the governor's legere-de-main with the feetax means "the loan" the state took from education will not be paid back. (You probably haven't heard that these schools are desparately short of money.)

(Ooops, too late.)

If you ever promise that money might be available for a spending increase, any threat to that increase is a cut. Even promising them an increase that ends up not coming to fruition gives the proponents of bigger government more ammo.

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