Thanksgiving is a time for reuniting with family and friends, but Uncle Sam will be joining you again this year in the form of taxes.  So say Jacob Feldman and Mattie Corrao of Americans for Tax Reform, who have determined the government tax bite for several aspects of your Thanksgiving weekend.

Many of these items are subject to the costs of income taxes, payroll taxes, corporate income taxes, and other taxes on business activity. Government then includes additional fees and excise taxes that further increase the cost of providing specific items or services.

Your travel:  The average $376 Thanksgiving flight consists of $43.57 in taxes. If you are driving, 45.3% of your fill-up goes to taxes.

Once you arrive, you just might wish to unwind with your relatives (or cope with your in-laws) by opening a bottle of your favorite wine. Uncle Sam gets 32.8% of the purchase price in taxes.

The average cost of a Thanksgiving meal for ten is just under $50.  As you enjoy your bountiful meal, try to be thankful that the government gobbles up “only” $13.68 of that total.

Now that you’re done feasting and the tryptophan is kicking in, it’s time to repair to the couch for some football. As you send your cousin Eddie out on a beer run, let him know the government tax bite on a case of beer is 44.3%.

Overall, of the $10 billion in overall spending that occurs during Thanksgiving weekend on gas and plane tickets, wine and beer, and the meal itself, government taxation consists of 35.9% of those expenses—approximately $3.6 billion.

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This Friday, Vermont’s cigarette tax goes up by 38 cents to $2.62 a pack, a move that backers hope will bring in an additional $4 million a year in revenue.

But there might be some bad news in store for residents of the Green Mountain State hoping the hike would help boost state coffers.  Just as Vermont’s tax is set to go up, its neighbor, Live-Free-Or-Die New Hampshire is cutting its cigarette tax by 10 cents a pack.

The dual moves could prove a boon for New Hampshire businesses, which already do a steady trade in selling goods taxed heavily by other states to residents of neighboring states who drive across the border to stock up.  Now, Vermonters may have an added reason to do so, and New Hampshire grocery and convenience stores hope to clean up.

Via NH Journal:

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As countless states across the country face budget shortfalls prompting calls for tax increases to ward off deep spending cuts, legislators in three states are taking a novel approach.  In New Jersey, New Hampshire and Rhode Island, Capitol Confidential has learned that bills have been filed to reduce, not raise, cigarette taxes.

In New Jersey, where a previous increase in the state’s cigarette tax ultimately resulted in a loss of revenue as against the pre-hike figure, the proposal is to cut the state’s cigarette tax by 30 cents, from $2.70 per pack to $2.40 per pack.

In New Hampshire, several Republican legislators in the House want to take 10 cents off the tax applied to each pack of cigarettes, and cut the tax applicable to other tobacco products from 65 percent to 48 percent of the wholesale price.

And in Rhode Island, a House bill aims to cut cigarette taxes by a full $1 per pack.

The approach favored by the legislators behind the bills stands in stark contrast to that favored by some of their colleagues: In a full nine states to-date, bills to increase cigarette taxes have been filed.  Anti-tax advocates remain wary of proposals to hike cigarette taxes in states including Illinois, Massachusetts, and even more conservative Idaho and Georgia.

Backers of the tax-cutting bills however continue to make their case that cigarette tax hikes operate like tax cuts– when taxes go up, revenue decreases, because smokers cut back, buy smuggled cigarettes illegally, or cross state lines to purchase cigarettes in cheaper jurisdictions.  On the flip side, they say cutting cigarette taxes will bring in more revenue.

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On July 1, a new cigarette tax hike took effect in New York.   But just three weeks after the state began levying the additional $1.60 per pack, the move is looking likely to prove a bust.  Reports are flowing of more New Yorkers crossing the Empire State’s borders to purchase their smokes.  Meanwhile, the state’s cigarette smuggling sting operations have been all but shut down, with the official responsible for overseeing such efforts having been axed just over a week ago.

Just one day after the hike went into effect, Massachusetts’ Berkshire Eagle reported that an Xtra Mart convenience store and gas station in Great Barrington was already seeing an uptick in purchases from bargain-hunting New Yorkers.  According to the manager of the store, “a lot of people are coming from New York…  We had to order a lot of cigarettes, more than usual, in anticipation of New Yorkers coming down.”

In Jersey City, convenience stores and gas stations have been benefiting from New Yorkers buying their smokes outside the state’s borders for years—and they expect to see more of that.  Phil Hwang, who works at a gas station near the New Jersey end of the Holland Tunnel, was recently reported as saying “People from Manhattan will buy cigarettes here and they’ll buy a carton at a time.”  He added that the last time New York hiked its cigarette tax, sales at his shop increased 20 to 30 percent.

In Pennsylvania, smoke shops were also anticipating a boost in customer numbers before the tax hike went into effect.

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New York Attorney General and Democratic gubernatorial candidate Andrew Cuomo is proving a canny politician the further he progresses in his career.  Thursday, the son of former Gov. Mario Cuomo trashed outgoing Gov. David Paterson’s budget plan, saying he opposes plans to tax soda and hike taxes on cigarettes, and favors cutting spending in order to close the state’s $9 billion budget gap.

According to the Syracuse Post-Standard, Cuomo also indicated Thursday that as Governor, he would bring down state spending by eradicating state agencies and cutting spending on education, health care and Medicare.

New York’s deficit is expected to reach as much as $15 billion next year, with many observers blaming Paterson’s big spending approach for the situation.

Republican candidate for Governor Rick Lazio has been bashing Cuomo for failing to detail how he would close the budget deficit, just as Paterson has been dancing around various proposals to deal with New York’s current budget crisis.

Just days ago, taxpayer groups and convenience store owners breathed a sigh of relief when Paterson backed off his plan to raise cigarettes by $1 per pack, following Republicans in the State Senate signaling that they would vote against any bill including tax increases.

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Across the country, states big and small are facing significant budget gaps.  In California, the worst case by far, candidates for state office are debating how to close a $19 billion budget deficit.  In Florida, meanwhile, another multi-billion dollar budget hole is on the cards, and looks set to grow with oil drilling off the Florida coast now off the table.  Still other states are facing similar situations, if on a less disastrous scale.  While many serving in statehouses nationwide will advocate for spending cuts, as opposed to tax increases, in some states, tax hikes are already being put on the table, with so-called “sin taxes” demonstrating renewed appeal.

Washington State recently increased taxes on beer and cigarettes in an effort to stop its own fiscal bleeding (though left-leaning figures in the state have also been arguing for a state income tax).

In Illinois, a proposal to increase cigarette taxes that went nowhere last year has now been resuscitated.

In Florida, where ongoing budget woes are anticipated, concern exists that legislators could jack up cigarette taxes again.  Last year, the State Senate—including its Republican members, led by Senate President Jeff Atwater and budget committee chief J.D. Alexander—unanimously voted to increase cigarette taxes by $1 a pack.  The House ultimately played ball, too, and Gov. Charlie Crist gave a thumbs up to the tax hike, which was expected to bring in anything from $700 million to $1 billion.

In New York, where cigarettes are already extensively taxed and can sell for as much as $9 per pack, further increases could be on the agenda, too.

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Isn’t it interesting how every time a state government is in fiscal trouble that the first thing they decide to do is to raise taxes on the sale of tobacco?  Somehow, legislators have it in their heads that the only people who might be upset by raising the cost of tobacco are smokers.  And, since smoking is bad for smokers, and smokers shouldn’t be smoking anyway, maybe making smokes more expensive will dissuade smokers from smoking.

Of course, this is government we’re talking about.  So it never works out they way they think it will, no matter who tries to tell them.  In fact, this plan to raise revenue from tobacco taxes doesn’t actually work at all.

See, governments don’t understand free markets.  If you raise the price of a certain good or service beyond a certain point, people who want the product badly enough will find a way to procure it more cheaply.  Remember Prohibition? Same thing.  To avoid paying the higher taxes, they will cross state lines, buy from an Indian reservation, buy over the internet, or even resort to black market purchasing.

And, if raising taxes does actually cut down the number of smokers, then the expected revenue from this tax increase will be less than expected…because there will be fewer smokers!

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