What many people may not know about the SCHIP bill that was signed into law recently by President Obama is that it includes a brutally high increase in federal excise taxes on cigars, pipe tobacco, and roll-your-own cigarette tobacco.  This one seems to have never gained much publicity for some reason.  I suppose I shouldn’t be surprised by that, given that smoking is so politically incorrect these days.

Here are the basics of the new taxes, to give you an idea of just how outrageous they are:

• The tax rate on large cigars will now be 52.4% (with a cap of $0.40 for individual cigars)
• The federal tax on cigarettes goes from $0.39 to $1.00 per pack
• The tax on pipe tobacco goes from $1.0969 per pound to $2.8126 per pound
• The tax on roll-your-own cigarette tobacco goes from $1.0969 per pound to $24.62 per pound!

The only way I found out about this was when I got a mailer from Finck Cigar Company about the new taxes.

After receiving the mailer I started doing a little research into it and came across a letter to the editor from Bill Finck (owner of the aforementioned Finck Cigar Company), who is now finding himself having his squishy bits squeezed by The Chosen One™:

Our little family-owned, 115-year-old cigar factory will not be able to sell enough at the increased price to remain open, and our 59 employees, half over 50 years of age, will become unemployed. The brutal tax burdens from SCHIP will crush the small cigar businesses and the roll-your-own cigarette businesses. Thousands of American jobs in the myriad of support businesses such as tobacco growing, tobacco processing, package manufacturing, transportation and sales operations will be lost.

I am proud of our new president and his repeatedly proclaimed intent to preserve and create jobs in the United States. Someone in his group has failed to recognize the loss of thousands of jobs resulting from the tax provision in SCHIP.

This is basic economics, but it never fails to amaze me that people don’t get it.  When you raise taxes on something, someone is going to have to pay for it, and if it’s something that is discretionary, people will buy less, which usually means that it’s the people at the bottom of the “social ladder” that get hit hardest.  Still, I can’t help but feel a bit of Obamanfreude at his predicament (as it sounds like he was an Obama supporter). 

Anyhow, back to the matter at hand…  I guess I am going to have to stock up before the tax tsunami hits.  I will either get a bigger humidor or get a couple more smaller ones as well as three or four boxes of cigars.  It’s more than I would usually spend, since I generally buy them by the stick or buy samplers so I can get 5 or 10 at a time (as compared to the usual 50 in a box).  At the rate I smoke them, four boxes would probably last ten years, but at least I’d be set against supply disruptions as the cigar industry adjusts and consolidates itself in the new environment.