Hit & Run

A. Barton Hinkle on How New York City's Steep Cigarette Taxes Create Crime and Grow Big Government

|

Credit: lanier67 / Foter.com / CC BY-NC-ND

Thanks to New York's laughably high cigarette taxes ($4.35 state plus another $1.60 in the city) and higher prices generally, a pack of smokes in New York City costs $14 or more. That creates a powerful incentive to smuggle smokes in from states such as Virginia, where you can buy a pack for a third of that price. Fill a Ford Econoline van with a few hundred cartons and you can make a nice five-figure profit in a weekend. Some people do.

The robust cigarette smuggling irritates officials in New York, because they miss out on a lot of tax revenue. The trade irritates officials in Virginia for the same reason, because smugglers buy wholesale to avoid the retail sales tax.

There's an easy fix for all of this, writes A. Barton Hinkle: Cut those taxes.

Free Minds and Free Markets aren't free! Support Reason's annual Webathon with a tax-deductible donation and help change the world in a libertarian direction. For details on giving levels and swag, go here now.