The Finch Formerly Known As Gold

6 May 2006

If it moves, tax it

"In this world," said Benjamin Franklin, "nothing is certain but death and taxes." And Eric Scheie notes that the former doesn't spell an end to the latter:

Cigarettes cost Catherine Cavallo her husband of 25 years.

Now they might cost her $875.63.

Two years after her husband, Anthony, died of smoking-related illnesses, Cavallo got a New Jersey tax bill for the thousands of cheap cigarettes he had ordered on the Internet.

In 1949, the Feds enacted something called the Jenkins Act, which required tobacco vendors to report out-of-state sales to the buyer's state; originally intended as a means to shut down tobacco bootleggers, Jenkins is now being put to use by a number of states to get the names of online buyers — which included the late Mr Cavallo.

Says Scheie of all this:

I remember the good old days when the very idea of "taxing the Internet" brought indignant cries of outrage from every geek and libertarian with a modem. Now it seems like a done deal. Ebay, Paypal, even virtual money — the state has its mitts everywhere.

Not to be confused with Mitt Romney, governor of Taxachusetts, a state which three years ago began enforcing Jenkins on its own.

Down here in Oklahoma, we have our own variation on this theme: tribal smoke shops, which make up about 4 percent of our tobacco retailers, garner 50 percent of the actual sales. There are various tribal tax rates, the lowest of which is 6 cents per pack; the rate assessed outside the tribes is $1.03. The Oklahoma Tax Commission hurriedly passed some emergency rules, which for now are on hold, at least partly due to the possibility of litigation by the tribes, who see them as yet another encroachment on their sovereignty. Besides, this is not an area where the state has a strong record of enforcement; you want enforcers, you call New Jersey.

Posted at 9:53 AM to Dyssynergy