Curmudgeon's Corner

Once upon a time, Wisconsin was a decent place for new businesses and existing businesses. Taxes were such as to permit new businesses to gain a foothold and to permit existing businesses to fund growth while covering the tax obligation to state and local governments.

We have evolved under both republican and democrat leadership to the point where we rank 7th of all 50 states in combined property and income tax load in 2006. We have been in this general area of ranking for the past several years.

Now, however, we citizens of Wisconsin are being attacked on many other fronts with both tax and fee increases. Beyond these attacks are more that threaten to remove our rights in addition to applying penalties for certain habits deemed to be less than appropriate by others.

I am particularly concerned today with a set of such tax and rights actions.

Cigarette smokers are a particularly “juicy” target. They are about 23% to 25% of the state’s population; that number has been constant over several years. Cigarette smokers are not organized and, therefore my mention of them as a "juicy” target. Anyone can take shots at this group for days, weeks and months on end and draw nary a peep in response. This group faces an increase of $1.25 per package of cigarettes raising the total state tax to $2.02. That represents an increase of 125% from the current $0.77 per package.

The taxes gathered are supposedly going to be used solely for health care purposes and education to keep future generations from smoking. I remember that same argument being used when we were a “Johnny-come lately” joining umpteen other states a few weeks before the smoking money decision was rendered. I doubt that any more than 1% of that money went toward educating kids on the evils of smoking. The rest found its way into other pet projects of our Wisconsin politicians.

Can we therefore cynically expect a similar outcome from this effort? I suspect we all know the answer to that question.

There is another piece to this tax increase that has seen little press. It refers to the increase from about 25% to something in the range of 65% tax on the wholesale cost of “Other Tobacco Products” or OTP. Those products are largely made up of premium cigars. That represents an increase of some 38% in the tax rate. If a cigar had a wholesale cost of $4.00, it has a current tax of $1.00 added thus making the fully loaded wholesale cost $5.00. That amount is marked up by the retailer to covers costs and to make a profit. That same cigar, in the new world desired by the tax increase crowd, would have new fully loaded wholesale cost of $6.60 before the mark-up is applied.

This OTP group of premium tobacco products accounts for about 5% of the total of $291 Million dollars collected, or about $14.5 Million.

The tax increase for cigarette smokers is a foregone conclusion. I cannot argue that since I believe cigarette smokers do suffer higher health care costs. IF, and that is a big IF, the increased collection of taxes was truly dedicated in large part to the health care needs of those smokers, I would be very comfortable. As my cynical self mentioned earlier, however, I don’t for a minute believe the money will go there.

I am convinced however, that an increase in the OTP (premium tobacco) tax is purely vindictive, amounts to little more than a “hill of beans”, and is not justifiable based on the “increased cost of health care” argument.

Let me further expand upon the “vindictive” theme. Other legislation is pending today that would forbid smoking anything in any public establishment in Wisconsin.

That includes cigar shops such as my favorite, Metro Cigars in Germantown, WI. It has nothing whatsoever to do with innocent people suffering the harms of “second-hand” smoke. This is purely the knee-jerk reaction of the do-gooders who think that I should not be permitted to enjoy my chosen lifestyle even though it harms no one other than possibly me and the employees of Metro Cigars…who have all chosen to be there. Don’t engage in the, “well the employees had no choice; they had to have a job” argument. That is pure bunk. I know the employees of Metro Cigar and anyone of them could easily have another job if they chose.

I encourage you to make your views known to your elected representatives. The tax increase proposition is part of the state’s budget, so it will not have a separate hearing as would’ve been the case with a free-standing bill. By pasting this to your browser address bar http://waml.legis.state.wi.us you will be able to locate your state legislators so that you can make your voice heard. And please do so today because there is not much time left before positions harden. The budget battle is likely to continue on through the summer, but don’t count on that and miss your opportunity.