The Audacity Of Dopes: S-CHIP Claims Its First Victim


You don’t have to be a rocket scientist to know that you cannot put the burden of taxation on one industry and expect that industry to survive. But apparently our President and Congress don’t even have that much of an understanding of basic economics. But once again, they are blowing smoke up our… well, just read the following.

cigarWe now have our first business obituary as the direct result of the 700% tax increase placed on the tobacco industry to support the S-CHIP legislation. The iconic 107 year-old Hav-A-Tampa Cigar Company(located in the Tampa neighborhood known as Ybor City) announced it has no other choice but to close its factory leaving its 500 workers unemployed, all due to the 700% tax increase levied with the passage of the S-CHIP legislation.

Now before all you non-smokers smirk and and celebrate, let me paraphrase Martin Niemöller:

“When they came for the tobacco users, I remained silent, because I don’t smoke.”

Once the tobacco industry has been wiped out in this country, what makes you think for a moment Obama and his bunch of grinning idiots won’t go after a hefty tax on soft drinks, candy bars, beer, wine, ice cream and snack foods? After all, these are all “weapons of ass destruction” in the war on obesity are they not?

For the 90% in Congress too stupid (or indifferent) to understand business economics 101, here it is in plain English: If a business has to raise the federal tax on its product by 700%, customers will simply give up the product. In the case of Hav-A-Tampa cigars, these were cigars for the average working man: high quality and, most important, affordable to those on a tight budget.  But no more. Most of their customers will simply have to stop smoking cigars.

That’s exactly what’s happening now, and the parent company of Hav-A-Tampa, J.C. Newman, has done the math. They’re finished in Tampa. Not because of the prolonged recession.  They made it through 2 World Wars and a depression. But they can’t survive the Obama administration.  So they will re-locate their cigar production, out of necessity, to an off-shore location where lower wages will help make up the difference, leaving 500 more skilled workers unemployed in Tampa.  Wanna bet that doesn’t show up in Obama’s statistics of jobs created or saved?

Eric M. Newman, president of the J.C. Newman Cigar Co. (which was founded by his grandfather in 1895), and president of the Cigar Manufacturers Association of Tampa sums it up perfectly in a local news article recently (emphasis is mine):

“Soon the factory will be gone. It is a sad day for the city of Tampa and its historic cigar industry, but the greatest tragedy is that this factory closing could have been avoided.

The deep recession has been challenging for Hav-A-Tampa, like all businesses, but the company was coping. The tipping point that pushed Hav-A-Tampa over the edge was the enormous 700 percent tax increase that Congress imposed on the cigar industry two months ago in order to expand health care for needy families.

Cigar-makers supported expanding the State Children’s Health Insurance Program. We believe everyone should have access to quality health care.

What we opposed was Congress’ decision to fund the expansion of this government program by taxing a single industry. Health care should be a shared responsibility.”

Indeed, if this program must be shoved down our throats, the burden should have been shared. However, in the typical fashion demonstrated by Obama and his lack of experience, he singled out ONE industry. Only a fool would believe a single industry could bear the costs related with his wild-eyed Utopian concept. Indeed one can only wonder was this the biggest political miscalculation since Japan attacked Pearl Harbor or was this merely a calculated smoke screen (pun intended) to destroy the tobacco industry once and for all? Mr. Newman avoided asking that question. I ask it on his behalf.  Newman continues:

“We pleaded with the leaders of Congress not to tax us out of business. We explained how a 700 percent tax increase would cost jobs and force some cigar companies to close their doors. Sadly, our pleas fell on deaf ears and what we feared has become reality. When will Congress understand that it cannot dramatically raise taxes on businesses without costing jobs?

How ironic it is that many former Hav-A-Tampa employees could soon need assistance from the very government program whose expansion cost them their jobs and health insurance in the first place.

Business is challenging enough these days. By continuing to impose additional tax increases on already burdened businesses, Congress and state legislatures could quickly decimate an entire historic industry. When will our leaders learn?”

Uh, Mr. Newman? Hopefully that lesson will be taught to Congress in the mid-term elections and to the current resident of 1600 Pennsylvania Ave.

Many of us are counting the days.

Gerry Ashley

8 Responses to The Audacity Of Dopes: S-CHIP Claims Its First Victim

  1. Archie says:

    While I am saddened for my country, I have no sympathy for the cigar makers if they indeed “supported expanding the State Children’s Health Insurance Program” as the article claims. They wanted more federal government spending, they just didn’t want to have to pay for it. They should be careful for what they wish in that case.

  2. Gerry says:

    Thank you for your comment, Archie, but I must correct you.

    You write,

    “They wanted more federal government spending, they just didn’t want to have to pay for it.”

    That dog just won’t hunt, Archie. That’s not even close to being true.

    Newman’s position on this was made very clear when he wrote: “What we opposed was Congress’ decision to fund the expansion of this government program by taxing a SINGLE industry. Health care should be a SHARED responsibility.”

    I put the emphasis on the words “industry” and “shared” in case you missed them earlier. That clearly implies they were willing to pay their share.

    It’s one thing to disagree with Newman. It’s quite another to try to implant a false reason (“they just didn’t want to have to pay for it.”) to support your criticism. That only serves to reduce the credibility of your comment.

    Like you, I am against the SCHIP program altogether. But I don’t wish ill on the cigar makers because they do. Full disclosure: I am a cigar smoker. And, as a consumer, I resent having to pay the entire cost of this program while others don’t have to contribute a dime, simply because I enjoy a good cigar occasionally. But I would resent it just as much if I were singled out to cover the cost because I enjoy beer. Or Chocolate bars. Or Ice cream.

    Again, thanks for your comment.
    Gerry Ashley

  3. stlmarketingexperts says:

    This tax was problematic for me.
    First, I hate any and all kinds of taxation at all times. Period.
    Second, I am at an absolute loss as to what our elected officials are doing!!
    Third, I hate tobacco since it has adversly affected several of my family members. I smoked three or more packs of unfiltered cigarettes for a dozen years and wound up with heart issues including a slight heart attack and by-pass surgery.
    Still, I am in absolute agreement with you on this issue or really these issues.
    Thanks for the article.
    Bill

    • Gerry Ashley says:

      Thank you for your comment, Bill.

      Smoking is a pretty polarizing habit, but it should remain part of “the pursuits of pleasure” for those so inclined.

      As to what our elected officials are doing? God Only Knows… But keep in mind we have a mid-term election coming up (if Emperor Obama should still allow it). We can take those up for re-election and provide them each with their own stimulus package: A bus ride to the unemployment line!

      Thanks again for your comment, Bill.

      Gerry

      • OK, but let’s get their PAC supporters to pay for the bus ticket. And, what we need as a long term solution is Term Limits for all elected officials – local, state and federal – like the President has – two terms and you’re out automatically. If a person with good intentions is elected and cannot make a beneficial difference in two terms we can assume that he/she has been corrupted by the system that the politicians created anyway.

    • Gerry Ashley says:

      Hi Bill,

      In your reply to my reply, you wrote:

      “OK, but let’s get their PAC supporters to pay for the bus ticket. ”

      (My reply is in caps only to help differentiate my latest comment from yours)

      I LIKE THE WAY YOU THINK, BILL. YOU THEN ADD:

      And, what we need as a long term solution is Term Limits for all elected officials – local, state and federal – like the President has – two terms and you’re out automatically.

      ABSOLUTELY!

      If a person with good intentions is elected and cannot make a beneficial difference in two terms we can assume that he/she has been corrupted by the system that the politicians created anyway.

      OR WE CAN ASSUME THAT HE/SHE IS SIMPLY INEFFECTIVE (IN WHICH CASE IT’S ALSO TIME TO GO).

      Thanks again for your comments, Bill.

  4. anonymous says:

    Altadis U.S.A. is the parent company of Hav-a-Tampa, not J.C. Newman. JCN is still producing cigars at its Tampa location

  5. Gerry Ashley says:

    Hi Anonymous…

    Thank you for the correction on the Parent Company being Altadis. Good catch. Newman was speaking as the President of the Cigar Manufacturers Association of Tampa, not as the owner of the Hav-A-Tampa brand. Mea Culpa.

    That said, however, the fact remains that next month the factory closes and 500 people will be losing their jobs. And the gist of the article remains true: What industry will Obama and company turn to next that they want to crush? Beer? Wine? Soft drinks? Candy?

    If his goal was REALLY to “help the children” via the S-CHIP, he wouldn’t have put all his eggs in one basket.

    This is what happens when you elect a President who has never even run a successful lemonade stand and then entrust him/her with a nation’s economy. And if you think that’s being harsh, let me remind everyone, they went from “pass this stimulus or America may never recover” to “the economy was worse than we thought.”

    Brilliant leadership, eh? Simply Brilliant. And they called Bush 43 Stupid?

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