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Tobacco Companies Find Tax Loophole Worth Hundreds Of Millions
Tobacco companies have found a loophole in the president’s child health law that’s saving them hundreds of millions of dollars a year.
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11 Comments 
WASHINGTON (November 17, 2009)--Tobacco companies are saving hundreds of millions of dollars a year by exploiting a loophole in President Barack Obama's child health law, and they're doing it with a simple marketing twist.
Mr. Obama and Congress increased taxes on tobacco products earlier this year to pay for expanded children's health insurance.
The tax increased the price of tobacco for those who roll their own cigarettes for $1.10 to $24.78 a pound and some predicted the steep hike would kill the roll-your-own industry.
But tobacco companies adapted.
The Associated Press found that as soon as the tax was on the books, companies all but shut down their roll-your-own brands and reinvented them under a less-restricted, less-taxed category: pipe tobacco that’s still destined to be rolled and smoked, but that’s taxed at barely a tenth the rate.
Retailers are steering customers to the new products, sometimes with a wink and a nod, sometimes with outright advertising.
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When will we all realize that when a company is taxed, they do not get hurt.all the company does, whether it is a gas company or a tobacco company, is raise it's price to us the consumer. A tax like this is a muse to get more money for the federal government. Why do we think cugs. no longer cost one dollar per pack?
It's a complicated game played by the tobacco giant, namely, Altria (Philip Morris) who wants to monopolize the market and kill all small manufacturers. Politicians are just pawns - regardless of Obama administration or Bush.
Gary: If tobacco cost $11.48/lb before tax, and was taxed $24.78/lb, that would make it $36.26/lb. Therefore taxes make up 68% of the total cost. For Distilled spirits taxes make up roughly 60% of the total cost. The high taxes on these items reflect their impact on society. No amount of tax on a cigarette would EVER recover the amount of money spent on health care (doctors visits, tests, treatments) for victims of cancer as a result of tobacco use. Unfortunately other people, such as myself, are stuck footing the bill through higher insurance premiums to make up for people like you. Just as you have a poor understanding of how taxes work, you have a poor understanding of economy in general. Where do you think money comes from? Taxes are a necessary evil, and are in NO WAY a recent development. Lastly, I find it pathetic that you think the ethnicity of the president has anything to do with this topic of conversation. Do yourself a favor and pick up a book sometime. You're ignorant.
