Tuesday, October 25, 2005

Big government: yo, where's our cut? Part II

Big government: yo, where's our cut?

What's the difference between big government and a mobster extorting you?

Not much, when their greatest similarity overshadows the rest: both want their percentage of your business, right off the top.

The title of this AP article doesn't sound like it's about big government, until it gets into why Eliot Spitzer pressured UPS. At least Spitzer is being honest. Reducing underage smoking is clearly a secondary, if not incidental goal; mentioned only twice, it's just a pro-motherhood, anti-sin excuse. The article emphasizes the real reason several times: Albany and other state governments want their tax money. Especially in New York, enough is never enough when it comes to government laying taxes on just about everything it can.

Curiously, New York's name is omitted when the article identifies Spitzer as "state Attorney General" -- was that an inadvertent implication that he considers his office powers to extend beyond New York's borders?
UPS Agrees to End Cigarette Deliveries

The world's largest shipping carrier, UPS Inc., will stop delivering cigarettes to individuals in the United States under an agreement announced Monday with state Attorney General Eliot Spitzer.

The agreement is the latest in federal and state efforts to combat the sale of under-taxed cigarette and to fight underage smoking. Most under-taxed or untaxed cigarettes are sold by Indian tribes, where the taxation of sales to non-Indians is disputed.

Monday's agreement leaves only the U.S. Postal Service among major carriers to continue to deliver cigarettes to individuals, Spitzer said. He called that practice "an embarrassment."

Despite a new policy adopted by the Postal Service in September to refuse delivery of illegal products, the federal service allows employees to accept packages suspected of containing under-taxed cigarettes, Spitzer said.

"Internet cigarette traffickers are increasingly using the federal mail system to distribute their wares," Spitzer said. He said the Postal Service "clearly" has the authority to refuse to deliver cigarettes to individual smokers. "It is an embarrassment that major private companies have stopped carrying contraband cigarettes, but the federal government continues to accept them," said Spitzer, a Democrat running for governor. "Congress needs to step in and stop this practice immediately."

The Postal Service can't stop delivery even if it suspects a package clearly marked as coming from a retailer contains untaxed cigarettes, said Postal Service spokesman Gerry McKiernan.

"There could be souvenirs in the package. We don't know because we can't see inside the package," he said.

Instead, the Postal Service will watch for packages if advised by law enforcement agencies. They also will alert law enforcement agencies when the service is shipping those packages, he said.

"It's up to law enforcement agencies to enforce the law," McKiernan said.

Earlier this year, DHL banned cigarette deliveries to individuals nationwide and the nation's largest credit card companies stopped processing payments for cigarette sales.

Spitzer said Internet and mail-order cigarette retailers violate federal, state and local laws governing taxes and underage smoking. Sales to minors also violate federal wire fraud and mail fraud laws, he said....

States lose more than $1 billion a year in tax revenue from Internet tobacco sales, according to the U.S. Bureau of Alcohol, Tobacco and Firearms. Enforcement, however, has been difficult, even though in many states, including New York, the Internet sale of tobacco products is illegal.
Forgotten is Bastiat's second great principle from "What Is Seen and What Is Not Seen": the first is the "broken window" fallacy, and the second is that government may take in less, but the people by definition retain that very same amount to spend or save as they see fit. In short, there is no economic gain to government spending, and there is in fact a deadweight loss, once we examine the disincentives that taxes have.

So when any government cries over losing revenue because people find ways to circumvent a particular tax, I myself rejoice that the people have that money to themselves. It's far preferable that a government cut its own spending when faced with revenue shortfalls, allowing the people to dispose of their money as they wish, instead of following the Democrats' new notions of "fiscal conservatism" that balances budgets by hiking taxes. (I addressed that at the beginning of my entry on Democrats' new myth of energy independence.)

Spitzer's proposed crackdown at the USPS is completely unenforceable. These "cigarette traffickers" need only commence sending packages in plain packages with a name and address that won't attract attention. They might spend a couple more bucks to ship each package, but their buyers would still find those worth paying. (I wonder if Spitzer and others would accuse me of breaking a law by giving advice to aid these "criminals.") But you can bet your last withheld dollar that big government will spend a dollar to collect a dime in taxes, particularly with such "principled" men as Eliot Spitzer. Yes, he's certainly principled, about getting big government's cut.

What will be next? Will the USPS start opening packages to check the contents, or will it require that we bring packages unopened and seal them only after a proper inspection? Heaven help us if the inspection process is as efficient and effective as airport searches -- the lines at most post offices are already long enough.

When the FBI has secretly monitored U.S. citizens for as long as 18 months, "without proper paperwork or oversight," don't put it past the USPS to start searching "suspicious packages." This is mission creep at its worst. Big government wants to save us from terrorists. Now it wants to save us from "cigarette traffickers" whose crime is not helping to fill up government's coffers.

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