The Delicious Irony of Tobacco vs States

Some background first:

After the tobacco settlements, it was written that those companies who made tobacco products (Phillip Morris, RJ Reynolds ect) would pay the states billions to cover the expense of care and punitive damages.

Now, these states who would recieve these monies over time, began to issue tobacco bonds, and planned to repay the debt holders with the monies they would recieve from tobacco. This way, the states raised money now, and would repay the debt and interest of the debt from monies recieved later.

Here it starts to get fun:

Recently Virginia was offering 7% tax free tobacco settlement bonds. The offer had already been allocated (ie. the buyers had made purchase) but it hadn't hit the street yet. The bonds were rated AA+/AA above junk bond status but below the AAA government guarentee rating. The 12 billion dollars required of Philip Morris to put in escrow, in essence to make sure the monies would be around for years in order to float the debt, was way too steep and Phillip Morris (ticker:MO) said it would put them in jeapordy and might have to declare bankruptcy (most likely a threat tactic).

Well, the rating on those VA bonds dropped over night (this was 1 week ago) and the bond deal was scraped.

Suddenly, we have the states scrambling to find ways to 'help' the tobacco companies, for fear of losing potential billions of dollars. This after all the time and money spent in suing them to begin with.

Well, that was a long winded explanation, but I just love it!

Reminds me of another quick story. In essence a guy bought expensive cigars and insured them. After smoking them all he made an insurance claim that they were each lost in a small fire. He won in court! After depositing the check, the insurance company turned around and sued him for individual acts of arson. They won.

Reminds me of another quick story. In essence a guy bought expensive cigars and insured them. After smoking them all he made an insurance claim that they were each lost in a small fire. He won in court! After depositing the check, the insurance company turned around and sued him for individual acts of arson. They won.

LOL! I *love* this country!

Yeah, this whole thing has taken an interesting bent in my mind.

Here in Oregon, iirc, the tobacco settlement money, and money gained from cigarette taxes, were to fund the Oregon Health Plan, which is a form of state provided health care.

As I understand it now, however, that money has instead been rolled into the ""General Fund"", which is just what it sounds like. The general fund seems to be this big, nebulous pool of money where all kinds of things are paid for.

So, as cigarette taxes rise, and smokers of our state pour money into the general fund coffers through their habit, is the state becoming more dependent on tobacco in the form of money than those smokers? Does the state really have an interest in getting it''s residents to stop smoking? If people stop smoking and stop buying cigarettes, then the state budget takes a financial hit.

If I''m reading the budget papers correctly, according to Oregon.gov, cigarette taxes accounted for over $104 million of the states revenue. I''ve read that the settlement money was around $117 million. That''s a nice chunk of change from an industry that is so demonized. Granted, I think that only ammounts to about 2% of the states total revenue.

Time to fit my tinfoil hat...

Very interesting, Wine.

Without the ''sin'' taxes, makes you wonder what state/local governments could do....

Also makes you wonder just how much scratch could be raised on making pot legal and taxing the hell out it. Not that someone from Oregon would have any idea....

OMI...Oregon Marijuna Inititive (sp). When I was in high school this was one of those rare social injustices I signed up for. Just hope the FBI wasn''t keeping tabs......

Well... sometimes cigars ARE more than just a cigar.

I can think of no better reason to necro a thread.

Rubb Ed wrote:

Well... sometimes cigars ARE more than just a cigar.

Indeed and might I add that it took all my willpower to hold it together after this comment.

I'd be interested to see if those 'sin' taxes specifically on cigarettes offset the higher cost of healthcare for smokers.

Can't we tax the hell out of them and do something about the smoke? I don't care what people do to themselves so long as I don't have to deal with it.

This is the story of taxation in the US for a long time. You could look at the lottery, gas tax, tire tax, toll roads and see a similar pattern.

Is the moral of the story is that the US is in desparate need of transparency, expediency, and efficiency from its government? Or will we just keep up with same old sh*t, different day? I pay some of the highest gas taxes in the country, for some of the worst, most dangerous roads. As a nation we pay the most for healthcare that is among the worst of our peer nations. The corn we subsidize is not fit for human consumption, but is turned to HFC and Cattle Feed with 20 percent of the country under nourished.

Threads necroed by spam that is then deleted are quite funny.

Yomm wrote:

Reminds me of another quick story. In essence a guy bought expensive cigars and insured them. After smoking them all he made an insurance claim that they were each lost in a small fire. He won in court! After depositing the check, the insurance company turned around and sued him for individual acts of arson. They won.

That would be funny if it weren't true.

LarryC wrote:
Yomm wrote:

Reminds me of another quick story. In essence a guy bought expensive cigars and insured them. After smoking them all he made an insurance claim that they were each lost in a small fire. He won in court! After depositing the check, the insurance company turned around and sued him for individual acts of arson. They won.

That would be funny if it weren't true.

In that case, it's funny.

Ah! Well, then, it IS definitely quite funny.