With all of the chatter about the bleak job numbers, many news reports have focused on the lack of job growth. They’ve focused on President Obama and Mitt Romney’s trips to beleaguered and weary Ohio, where the two spoke about their plans to create jobs.
However, few news reports have focused on efforts where Congress and the President have consciously and deliberately chosen to destroy the livelihoods of about 5,000 people, including many in Northeast Ohio.
Just a few days back, President Obama signed H.R. 4348 into law. This was the Transportation Bill (and student loan fix).
Rewind to 2009, just days into President Obama’s term, when he signed a law that dramatically increased taxes on those who use tobacco products, most earning under $250,000 a year. That law, the Family Smoking Prevention and Tobacco Control Act, increased tobacco taxes across the board. But, Congress (100% Democratically controlled at the time) didn’t anticipate how consumers would react.
Wait, Congress didn’t anticipate unintended consequences? What a surprise!
A promo for a roll-your-own-tobacco machine maker describes the opportunity this way:
Fact, with over 17 billion packs of cigarettes sold in the US annually, at retail prices averaging $5.50 a pack, this retail market spending of over 82 billion dollars a year is desperately looking for a way to save money. RYO Tobacco Machine is the answer to amazing value for your customers’ cigarette purchases, while you earn amazing profits at the same time with our amazing RYO Tobacco Machine system.
The Plain Dealer reports:
The disparity stems from taxes on roll-your-own cigarettes. Proponents of the new law say many are filled with pipe tobacco, which is taxed at a much lower rate than cigarette tobacco.
The businesses are a small but growing niche with their cabinetlike machines that roll 200 cigarettes in about 15 minutes. The prices hook customers: a carton of roll-your-own cigarettes made with loose tobacco costs under $25. A carton of brand-name cigarettes costs nearly $60, a difference based primarily on manufacturing costs and taxes.
In simple terms, the bill took dozens of small businesses across Northeast Ohio — and hundreds across the country — that have the machines and lumped them into the category of major cigarette companies on the issue of taxes.
Under the new provision, the owner of the machines would be responsible for paying federal excise taxes on the products the machines produce, according to published reports and interviews.
Business owners say they can’t pay the higher taxes, and they will either go out of business or look for different ways to make money. Some businesses like the Brunswick Smoke Shop offer more than just the machines, selling various brands of cigarettes and pipe tobaccos.
For those interested in the Congressese, section 100122, about 75% way through the bill, contains this language:
A person making such a machine available for consumer use shall be deemed the person making the removal as defined by subsection (j) with respect to any tobacco products manufactured by such machine. (source)
To those hundreds of business owners across the country who invested large sums of money in those machines, with a few votes and a stroke of the pen, are now effectively out of business.
Funny, we thought they actually cared about jobs. I guess instead of people competing to earn smokers’ business, people can still buy the costlier cigarettes with government assistance.