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Feds fear cigarette tax may fuel acts of terrorism
The Argus ^ | March 11, 2005 | Steve Geissinger

Posted on 03/12/2005 8:23:15 PM PST by Land_of_Lincoln_John

SACRAMENTO — An emerging new tale of age-old certainties — taxes and death — begins in California with the flip of a cigarette butt and ends in Iraq with a bullet hitting a U.S. soldier.

Democratic legislators from the Bay Area and Los Angeles, focused on quality of life in the state, are pushing three bills that would hike cigarette costs for litter cleanup or easing deficit pressures.

But federal terrorism investigators told The Argus on Thursday that such seemingly innocent legislation, further hiking high cigarette costs in California, would fuel their already tough battle against terrorist groups' lucrative smuggling operations in the United States.

The disclosure by federal law enforcement officials comes as they are beginning to crack down on illegal cigarette smugglers, who are providing a growing and crucial part of funding to terroristgroups such as al-Qaida and Hezbollah.

Two new reports by a separate federal watchdog agency, the U.S. General Accounting Office, detail the multibillion-dollar problem. Each is about 50 pages long. One was sent to Congress and the other to U.S. law enforcement agencies.

A smuggler transporting cigarettes from a low-tax state to a high-tax state, and selling them at a discount, can make about $2 million on a single truckload of cigarettes, according to the reports.

When informed of the new concern about a decades-old problem of black market cigarette sales, conservatives and anti-tax groups cheered Republican Gov. Arnold Schwarzenegger's stance against tax hikes in general and federal officials' efforts, while attacking the California legislation.

Conservative columnist and radio talk-show host, Geoff Metcalf, a nonsmoker, said the illegal proceeds "are going directly to funding bad guys killing Americans."

"The money is huge and, if caught, the punishment is way less than dealing drugs," he said.

"This is not a defense of tobacco but rather an indictment of the inability of politicians to recognize the consequences of jacking up the cost of cigarettes with 'politically correct' taxes," Metcalf said.

The three lawmakers who authored the bills — Assemblywoman Fran Pavley, D-Woodland Hills, and Sens. Tom Torlakson, D-Antioch, and Wes Chesbro, D-Arcata — were unavailable for immediate comment.

Aides and legislative analysts said the bills are aimed at worthy causes, obviously not at supporting terrorism.

Federal agencies trying to halt cigarette smuggling view it differently.

"The illicit sale of cigarettes and other commodities by terrorist groups and their supporters has become a crucial part of their funding activities," said William Billingslea, a senior intelligence analyst for the Office of Strategic Intelligence and Information in the Bureau of Alcohol, Tobacco, Firearms and Explosives in Washington.

"Raising the tax on cigarettes widens the difference between the wholesale and retail price and inadvertently creates opportunity for traffickers, who evade the tax and gain the profits," he said. "Cigarette traffickers can make as much as $60 per carton."

"Illicit cigarette trafficking now rivals drug trafficking as the method of choice to fill the bank accounts of terrorists," Billingslea said. "Each state that raises its cigarette taxes is a new prospect for illicit profits gained by trafficking in cigarettes."

Only one of the bills among the three would directly impose a tax hike on cigarettes. It's being sponsored by Torlakson, who has supported tax hikes in the past for specific needs, saying he is committed to "taking bold action to protect the lives and well-being of real people."

Proceeds from his measure would be used to fund health programs for poor children.

The Pavley and Chesbro measures are aimed at kicking smokers' cigarette butts off the California landscape. They would impose fees on cigarette makers and distributors to raise funds for litter cleanup — a cost that likely would be tacked onto the cost of the product.

More than a dozen Democratic lawmakers from the Bay Area and Los Angeles are co-sponsoring each of the bills.

A bill by Assemblywoman Jenny Oropeza, D-Long Beach, approaches the problem differently, boosting smokers' fines for cigarette-butt littering. She's also sponsoring a bill aimed at bolstering trespassers' penalties at seaports.

"In a changing world and amid increased awareness of terrorist threats, all safety violations must be taken seriously," she said. "It only makes sense that a security violation at our seaports must be prosecuted the same as a security violation at our airports."

The federal Bureau of Alcohol, Tobacco, Firearms and Explosives has more than 300 open cases of illicit cigarette trafficking — including several with terrorist links — up from only a handful five years ago, according to federal officials.

"The deeper I dig into this issue the angrier I get," Metcalf said. "When I share the information with other veterans and active duty military, the most common reactions are unprintable."


TOPICS: Foreign Affairs; News/Current Events; US: California; War on Terror
KEYWORDS: atf; cigarettes; cigarettetaxes; smoking; smuggling; taxes; terror; terrorfunding; texas
Illinois is also considering steep cigarette tax hikes. As a non-smoker, I don't know much about this issue, but it's a fair guess that other states are considering the same tactic to increase revenue.

Oh, a tip of the hat to Daniel Pipes, who referred to this article on his essential blog.

Oh here is a pic, which according to Pipes, was created by Islamists to insult him! I wish I'd get insulted this way.


1 posted on 03/12/2005 8:23:16 PM PST by Land_of_Lincoln_John
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To: Land_of_Lincoln_John

Someone call Texas and clue Perry and the Texas Leg. in on this.


2 posted on 03/12/2005 8:25:59 PM PST by need_a_screen_name
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To: Land_of_Lincoln_John

Stupid jackassed feds. First, they never should have put high taxes on cigarettes. Second, they never should have sued the tobacco companies. Stupid jackassed feds.


3 posted on 03/12/2005 8:26:50 PM PST by Enterprise (President George W. Bush - the leading insurgent detergent.)
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To: Land_of_Lincoln_John

Drug prohibition fuels terrorism.

Get the products out of the hands of the gangs and into legitimate companies and let the quality be controlled, the businesses taxed and the consumers informed. Just as we do with alcohol and tobacco.


4 posted on 03/12/2005 8:28:48 PM PST by johnmilken (75% of my posts are proved wrong within 10 minutes...)
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To: Land_of_Lincoln_John
But federal terrorism investigators told The Argus on Thursday that such seemingly innocent legislation, further hiking high cigarette costs in California, would fuel their already tough battle against terrorist groups' lucrative smuggling operations in the United States.

Same logic applies to the War on Some Drugs.

5 posted on 03/12/2005 8:34:04 PM PST by E. Pluribus Unum
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To: Land_of_Lincoln_John
But federal terrorism investigators told The Argus on Thursday that such seemingly innocent legislation, further hiking high cigarette costs in California, would fuel their already tough battle against terrorist groups' lucrative smuggling operations in the United States.

Same logic applies to the War on Some Drugs.

6 posted on 03/12/2005 8:35:25 PM PST by E. Pluribus Unum (Drug prohibition laws help fund terrorism.)
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To: Land_of_Lincoln_John

Anytime you have a commodity whose price is set artificially high due to illegality, cartel, or unusually high tax, it becomes a natural locus of criminal activity. The more artificial the price, the greater this phenomenon. Cocaine, diamonds, petroleum, and now tobacco are some examples.


7 posted on 03/12/2005 8:41:17 PM PST by SpaceBar
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To: SheLion

PING


8 posted on 03/12/2005 8:43:13 PM PST by kingattax ( "Evil triumphs when good men do nothing." -Thomas Jefferson)
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To: Land_of_Lincoln_John

Sounds like they are setting the stage for a uniform state tax which will raise the law states via a federal excise.


9 posted on 03/12/2005 8:52:27 PM PST by Raycpa
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To: Land_of_Lincoln_John
Cigarette taxes?

Can you say prohibition boys and girls?

I knew you could! (We all know where that went.)

Hiking cigarette taxes will have the same effect: i.e., none that's of any use. Tax revenues will level off at some point and will not go any higher no matter what rates the states or feds set.

Hint: see "Law of supply and demand."

10 posted on 03/12/2005 8:54:00 PM PST by Coyoteman
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To: Raycpa

Corrected: Sounds like they are setting the stage for a uniform federal tax which will raise the tax states in low tax states charge via a federal excise.


11 posted on 03/12/2005 8:54:13 PM PST by Raycpa
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To: Land_of_Lincoln_John
Bah, this is miniscule compared to the drug trade. Check out this excellent article about how Syria makes billions off heroin production.
12 posted on 03/12/2005 8:58:08 PM PST by billybudd
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To: Land_of_Lincoln_John

Kentucky's tobacco is supposed to go up 30 cents this
June. I suppose I'll write a thank you letter to Gov.
"fly your plane over the White House" Fletcher.

"P.C." taxes, makes me ill!




13 posted on 03/12/2005 9:06:09 PM PST by borntobeagle
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To: Land_of_Lincoln_John

The states desperately need money because, at the same time that they continue to spend at an irresponsible level, revenues are down due to offshoring: they used to enjoy taxes from production line workers at $25 an hour; now they are getting taxes from fast-food workers at $7 an hour. Big difference.


14 posted on 03/12/2005 9:09:35 PM PST by henderson field
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To: Land_of_Lincoln_John

Umm, how about identifying and deporting (or better yet, hanging) Islamofacists dealing in funneling finances to our enemies? That way, cigarette smuggling could be a venue reserved for honest American crooks.


15 posted on 03/12/2005 9:14:03 PM PST by Vigilanteman (crime would drop like a sprung trapdoor if we brought back good old-fashioned hangings)
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To: Land_of_Lincoln_John
The three lawmakers who authored the bills — Assemblywoman Fran Pavley, D-Woodland Hills, and Sens. Tom Torlakson, D-Antioch, and Wes Chesbro, D-Arcata — were unavailable for immediate comment.

They're probably all hiding out some where smoking cigarettes they purchased from some online source.

16 posted on 03/13/2005 3:18:11 AM PST by DumpsterDiver
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To: Land_of_Lincoln_John; Just another Joe; Madame Dufarge; MeeknMing; steve50; KS Flyover; ...
I'm just a little sick and tired of cigarettes and President Bush being blamed for all the ill's on earth!

Dear Governor, 

As a smoker and tax-paying citizen of this state, I am joining a nationwide smokers strike to inform the Governors of the states that smokers will no longer accept excessive and punitive taxation.  Nor will we accept unnecessary restrictions and regulations any longer.
Until that day comes, I will not purchase another pack of cigarettes manufactured by Phillip Morris, R J Reynolds, Brown & Williamson or Liggett - including any of their sub brands – I will no longer support the Master Settlement Agreement.  Instead, I will buy brands made by non-MSA companies
              

Smokers will willingly pay a fair rate of taxation: 


17 posted on 03/13/2005 5:55:28 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: Land_of_Lincoln_John
Here is what Illinois smokers ALREADY pay with their cigarette tax dollars:Illinois Information

Illinois Smokers:
A public yahoo group for anyone who wants to talk about the Illinois ban situation.

Illinois Smokers Alliance:
A smokers ban discussion group from IL.  A public group but moderated against posts made by anti-smokers.

Illinois State Page:
Facts, Press Releases, Visiting, Government, and more.

IDPH Online:
Illinois Department of Public Health
535 West Jefferson Street
Springfield, Illinois 62761

 


 

alt

 

Tobacco Taxes

Illinois's excise tax per pack of cigarettes: $0.980
Illinois's excise tax collection for the
fiscal year ending June 2002: $471,551,000

Sales tax on tobacco products: 6.25%
Local tax on tobacco products: $60,605,152

Federal excise tax per pack of cigarettes: $0.39
Total federal excise tax collections in fiscal year 2002: $7,512,700,000

Click here for the Cigarette Tax and Payment Table for all states.

 

 

Comparing Excise Taxes on Cigarettes, Beer and Wine


click for larger view

Number of six-packs of beer that must be sold in Illinois to produce the same state excise tax revenue generated by one carton of cigarettes: 94.2


click for larger view

Number of bottles of wine that must be sold in Illinois to produce the same state excise tax revenue generated by one carton of cigarettes: 67.8



Illinois Smokers' Contributions
to the State Economy - FY2003

 

In 2002, Illinois smokers comprised only 22.9%1 of the adult population in the state. Here is what they already pay because they choose to buy a legal product:



Smokers Pay Excise Taxes2 $ 653,697,000
Smokers Pay Local Excise Taxes $ 160,325,000
Smokers Pay Sales Taxes2 $ 58,000,000
Smokers Pay Tobacco Settlement Payments3 $ 339,495,000
  $ 1,211,517,000


Smokers' Economic/Tax Profile 2002

Click here to read all of it

18 posted on 03/13/2005 6:11:13 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: Land_of_Lincoln_John

19 posted on 03/13/2005 6:13:59 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: Land_of_Lincoln_John
"Cigarette traffickers can make as much as $60 per carton."

I don't know where they get their numbers, but they would have to give me better than $30 with each carton for me to sell one at that markup here (ND).

Most class A brands are selling around $30 now. I buy 'cheapies' for about 16 bucks a carton.

20 posted on 03/13/2005 6:19:09 AM PST by Smokin' Joe (I work with computers too much to let one run my car!)
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To: borntobeagle

Kentucky Information

Read more Kentucky News from Google News.

Forces Kentucky. New web site with a forum!

Kentucky Rights:
A public yahoo group for anyone who wants to talk about the Kentucky ban situation.


To reach any and all Kentucky senators and reps there is a toll free number: 1-800-372-7181. You can leave messages of support for bills or whatever for as many as you want.

Terry Gray
2004 candidate for House of Representatives.

Terry Gray, president of FORCES Kentucky, video online debating Smoking Bans.

Read Terry Gray at The Jefferson Review.

 



alt

 

Tobacco Taxes

Kentucky's excise tax per pack of cigarettes: $0.030
Kentucky's excise tax collection for the
fiscal year ending June 2002: $17,145,000

Sales tax on tobacco products: 6.00%

Federal excise tax per pack of cigarettes: $0.39
Total federal excise tax collections in fiscal year 2002: $7,512,700,000

Click here for the Cigarette Tax and Payment Table for all states.

 

 


 

Comparing Excise Taxes on Cigarettes, Beer and Wine


click for larger view

Number of six-packs of beer that must be sold in Kentucky to produce the same state excise tax revenue generated by one carton of cigarettes: 6.7


click for larger view

Number of bottles of wine that must be sold in Kentucky to produce the same state excise tax revenue generated by one carton of cigarettes: 3




Kentucky Smokers' Contributions
to the State Economy - 2003

Kentucky smokers comprise only 32.6%1 of the adult population in the state. Here is what they already pay because they choose to buy a legal product:

 

Smokers Pay Excise Taxes2 $ 21,436,000
Smokers Pay Sales Taxes2 $ 114,324,000
Smokers Pay Tobacco Settlement Payments3 $ 258,879,000
  $ 394,639,000


Smokers' Economic/Tax Profile 2002
Kentucky Smoker Facts5



TOTAL SMOKER CIGARETTE PAYMENTS TO KENTUCKY
 
Per year: $ 394,639,000
Per day: $ 1,080,463
Per hour: $ 45,019
Per minute: $ 750
Per second: $ 13


CIGARETTES DON'T PAY TAXES -
KENTUCKY SMOKERS DO!!


 

    1Centers for Disease Control's Behavioral Risk Factor Surveillance System, 2002
    2Orzechowski & Walker, Arlington, Virginia; from state revenue department.
    3PriceWaterhouseCooper
    4U.S. Census Bureau, 2000 state population and Centers for Disease Control's Behavioral Risk Surveillance System, 2002
    5Tax comparisons are from Kentucky Office of the State Budget Director, Fourth Quarter, 2003 Quarterly Economic and Revenue Report, online at http://www.osbd.state.ky.us/publications/4thQTR-FY03.pdf. Budget comparisons are from the Kentucky Office of the State Budget Director, 2004-2006 Budget of the Commonwealth: Historical Data, online at http://www.osbd.state.ky.us/publications.htm.

    Click here to read the rest


21 posted on 03/13/2005 6:19:11 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: kingattax
Thanks for the ping!!!
22 posted on 03/13/2005 6:21:19 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: henderson field
The states desperately need money because, at the same time that they continue to spend at an irresponsible level, revenues are down due to offshoring: they used to enjoy taxes from production line workers at $25 an hour; now they are getting taxes from fast-food workers at $7 an hour. Big difference.

Maybe where you live, but definitely not here. You cannot 'offshore' farm or oilfield labor. It has to be here in the first place.

So that excuse to keep taxing more instead of spending less just won't wash.

23 posted on 03/13/2005 6:22:09 AM PST by Smokin' Joe (I work with computers too much to let one run my car!)
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To: SheLion
Instead, states should equalize their tobacco taxes –

NO, NO, and NO!

This amounts to price fixing. Why should North Dakotans have to pay the same tax as New Yorkers? Screw that!

Rein in your legislatures!

24 posted on 03/13/2005 6:25:29 AM PST by Smokin' Joe (I work with computers too much to let one run my car!)
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To: Smokin' Joe
North Dakota Information

alt

 

Tobacco Taxes

North Dakota's excise tax per pack of cigarettes: $0.440
North Dakota's excise tax collection for the
fiscal year ending June 2002: $19,118,000

Sales tax on tobacco products: 5.00%

Federal excise tax per pack of cigarettes: $0.39
Total federal excise tax collections in fiscal year 2002: $7,512,700,000

Click here for the Cigarette Tax and Payment Table for all states.

 

 


Comparing Excise Taxes on Cigarettes, Beer and Wine


click for larger view

Number of six-packs of beer that must be sold in North Dakota to produce the same state excise tax revenue generated by one carton of cigarettes: 48.9


click for larger view

Number of bottles of wine that must be sold in North Dakota to produce the same state excise tax revenue generated by one carton of cigarettes: 44.4



North Dakota Smokers' Contributions
to the State Economy - 2002

 

North Dakota smokers comprise only 22.1%1 of the adult population in the state. Here is what they already pay because they choose to buy a legal product:



Smokers Pay Excise Taxes2 $ 19,117,534
Smokers Pay Sales Taxes2 $ 8,689,789
Smokers Pay Tobacco Settlement Payments3 $ 23,162,587
  $ 50,969,910


Smokers' Economic/Tax Profile



 

North Dakota Smoker Facts 5



TOTAL SMOKER CIGARETTE PAYMENTS TO NORTH DAKOTA
 
Per year: $ 50,969,910
Per day: $ 139,548
Per hour: $ 5,815
Per minute: $ 97
Per second: $ 2


CIGARETTES DON'T PAY TAXES -
NORTH DAKOTA SMOKERS DO!!

click here to read the rest

25 posted on 03/13/2005 6:33:44 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: SheLion
WOW! Thank you for the information and the informative link!

We know we are already getting screwed. I pay more for car insurance than a non-smoking drinker who has had no DUIs and I don't drink. There is no way any of this is equitable.

That said, there is no way charging say...2.40 a pack state tax (like NJ) is going to make it any more fair, and if the taxes were equalized, you can bet your last butt in the pack that they would all normalize around the current maximum. (What legislature could resist the windfall?--the antis would be screaming for it in the streets!)

26 posted on 03/13/2005 7:04:07 AM PST by Smokin' Joe (I work with computers too much to let one run my car!)
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To: Smokin' Joe
That said, there is no way charging say...2.40 a pack state tax (like NJ) is going to make it any more fair, and if the taxes were equalized, you can bet your last butt in the pack that they would all normalize around the current maximum. (What legislature could resist the windfall?--the antis would be screaming for it in the streets!)

I'm glad you can use the link!!  Bookmark it. :)

Well, our glutton lawmakers need to hear from us.  We are sick and tired of being blamed for everything because we smoke and we are sick and tired of carrying the state budgets on our backs.  It has to end.

Black market?  Terrorists?  Well, if each state would treat their constituents fair that smoke a legal product, none of this would have happened.  The lawmakers screwed us, and we turned around and screwed them, and they can't take the blame to save their lives.

The government created this cigarette black market and if the terrorist are in on the deal, the lawmakers have no one to blame but themselves.

Last I looked, cigarettes are still a legal product and it's the American Way to Shop Cheap.



27 posted on 03/13/2005 7:16:57 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: SheLion
The government created this cigarette black market and if the terrorist are in on the deal, the lawmakers have no one to blame but themselves.

AMEN.

28 posted on 03/13/2005 7:26:14 AM PST by Gabz (Wanna join my tag team?)
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To: Gabz

That's exactly how I feel. But the lawmakers will never take the blame. They can do no wrong, you know.


29 posted on 03/13/2005 7:41:32 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: Land_of_Lincoln_John
Why isn't unlawful for state and federal agencies to over tax legal products based purely on social preference. This is a bad precedence, it allows authority to dictate which legal products we chose. Alcohol, fatty foods, what car you buy, this is tyranny and it goes against freedom of choice in a free society. The way cigarettes are taxed you would believe it was a valuable commodity like a nice home, but quite the contrary, they believe it has no value.
30 posted on 03/13/2005 7:48:35 AM PST by TheForceOfOne
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To: SheLion

They need to be continually told they, not smokers are to blame. It needs to be repeatedly oudly and often.


31 posted on 03/13/2005 8:20:30 AM PST by Gabz (Wanna join my tag team?)
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To: TheForceOfOne
but quite the contrary, they believe it has no value.

Au contraire.......it is of great value to our esteemed lawmakers........you see, tobacco users are only 25% of the population, a minority, thus an easy target for ridicule and outrageous taxes. The majority are all in favor of taxing someone else, so come re-election time they can happily proclaim they didn't raise taxes and the majority will believe how fiscally responsible they are, forgetting that a small minority was taxed to balance the budget.

32 posted on 03/13/2005 8:23:35 AM PST by Gabz (Wanna join my tag team?)
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To: Gabz
No no your right, I didn't mean it that way. What you point out is the way they do it. Condemn it and tax it to death. If it was so bad for us why wouldn't they outlaw it, the money, the money, the money, and so it shows they don't really give a damn about the affects it has on your health but they do care about your wallet! lol
33 posted on 03/13/2005 8:42:09 AM PST by TheForceOfOne
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To: TheForceOfOne

I understood what you meant - I was being sarcastic, as I had assumed you were.


34 posted on 03/13/2005 8:45:17 AM PST by Gabz (Wanna join my tag team?)
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To: SheLion

Thank you SheLion...Just sent this along to a buddy who has to go sign the tobacco buyout forms tomorrow morning.

He said 15 years ago he had 2800#., now it's 701#.

And of course, it's been cut down to $7.00 a lb. Not only is the Government crushing the smokers, but the tobacco farmers as well.




35 posted on 03/13/2005 9:01:07 AM PST by borntobeagle
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To: borntobeagle
And of course, it's been cut down to $7.00 a lb. Not only is the Government crushing the smokers, but the tobacco farmers as well.

Well, thank God for the Internet. They can't hide this stuff anymore. And they better know that!

More and more of us are on to them every day. We can see what it's all about. Money.

Good luck to your friend.

36 posted on 03/13/2005 9:12:09 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: SheLion

nice paw print......makes it easier to track you :)


37 posted on 03/13/2005 9:19:49 AM PST by kingattax ( "Evil triumphs when good men do nothing." -Thomas Jefferson)
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To: kingattax
nice paw print......makes it easier to track you :)

Heheh!


38 posted on 03/13/2005 9:22:41 AM PST by SheLion (The America we once knew and loved ........................is gone.)
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To: Land_of_Lincoln_John
The disclosure by federal law enforcement officials comes as they are beginning to crack down on illegal cigarette smugglers, who are providing a growing and crucial part of funding to terroristgroups such as al-Qaida and Hezbollah.

That's a gimme!

However, for some reason, cutting taxes is NEVER, EVER on the list of recommendations to alleviate ill or undesirable circumstances.

39 posted on 03/13/2005 12:57:37 PM PST by EGPWS
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To: SheLion

Kentucky surprises me. There's some tobacco growing there.


40 posted on 03/13/2005 2:00:30 PM PST by Land_of_Lincoln_John
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To: Gabz
I'm sorry, sometimes I read to much into things, my apologies FRiend.
41 posted on 03/13/2005 4:08:43 PM PST by TheForceOfOne
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To: TheForceOfOne

Not a problem, FRiend, not a problem.


42 posted on 03/13/2005 6:38:25 PM PST by Gabz (Wanna join my tag team?)
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To: Land_of_Lincoln_John
The Law of Unintended Consequences does not apply to (legal) extortionists posing as "do-gooders"...
43 posted on 03/21/2005 1:06:51 PM PST by Publius6961 (The most abundant things in the universe are ignorance, stupidity and hydrogen)
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