Gotta Love American Ingenuity (& Tax Avoidance)
July 7, 2012 § Leave a Comment
So I’m reading two stories (here and here) about a new law that will effectively outlaw Roll-Your-Own tobacco stores. It’s something I kinda follow because I always thought it was a decent business model (until the government outlaws your business) and another fine example of what steps people will go through to avoid taxes.
A tiny amendment buried in the federal transportation bill to be signed today by President Barack Obama will put operators of roll-your-own cigarette operations in Las Vegas and nationwide out of business at midnight. …
The machines are used by customers who buy loose tobacco and paper tubes from the shop and then turn out a carton of finished cigarettes in as little as 10 minutes, often varying the blend to suit their taste. Savings are substantial – at $23 per carton, half the cost of a name-brand smoke – in part because loose tobacco is taxed at a lower rate.
And I was thinking about how sad this was for all the people who work in this industry: the store owners, their employees, the folks who manufacture the RYO machines, their families, the companies who make the cigarette tubes, and the loose pipe tobacco makers, and all of the folks who work in packaging all of these things.
And then… in the comment section of the Law Vegas article I read this:
James Fliess Jul. 6, 2012 | 2:47 p.m.
Just a thought. My understanding, and maybe I’m wrong, is that cigarettes manufactured by these machines must cost (via taxes) as much as other cigarettes. How about this arrangement. The store sells the tobacco and supplies as they always have, but they do not have a rolling machine. A buisness next door does not sell tobacco or supplies, but it rents time on their rolling machine. Does it work?
Kudos to you Mr. James Fliess!!