I expect this from CA, NY or MA, but TN? WTF?

[Overpaid Slacker]

I honestly read about his thinking "Are you f*cking kidding me. No, are you f*cking kidding me?!!!...." Has no one in TN ever heard of or read the Constitution? Supremacy Clause, Interstate Commerce Clause . . . freakin' Federalism?!?! Gaaaak! What next, TN starts minting its own money and entering into treaties with foreign powers?

From CQ:

For those who seek to increase sin taxes as a means of funding social engineering, the experience of Tennessee should give pause. The state passed a large increase in cigarette taxes, creating a large disparity between Tennessee and its neighbor states. Since the people in Tennessee can drive elsewhere to pick up their smokes, the state has decided to do border inspections to charge people for engaging in free-market economics -- and some may not be able to drive to other states at all as a consequence (via Instapundit):

Starting today, state Department of Revenue agents will begin stopping Tennessee motorists spotted buying large quantities of cigarettes in border states, then charging them with a crime and, in some cases, seizing their cars.
Critics say the new “cigarette surveillance program” amounts to the use of “police state” tactics and wrongfully interferes with interstate commerce. But state Revenue Commissioner Reagan Farr says his department is simply doing its job, enforcing a valid state law while protecting Tennessee retailers who properly pay state taxes.

Agents have already been watching out-of-state stores that sell cigarettes near the Tennessee border to “get a feel where problem areas are,” Farr said.

While declining to be specific, the commissioner said “problem areas” are generally along interstate highways with exits near the Tennessee border.

I can't wait for the first legal challenge to this enforcement. As far as I can see, it violates federal sovereignty in interstate commerce, the 4th amendment, and the spirit of the entire Constitution. Let's try to tackle this one issue at a time.

First, Tennessee has no jurisdiction over what stores in other states sell, even if the material was illegal, which tobacco is not. They can't conduct surveillance in Missouri, for instance. The fact that they are "watching out-of-state stores that sell cigarettes" should be enough to demand some resignations, starting with the commissioner himself.

Second, people do have the right to cross state lines to purchase legal commodities. If Tennessee wants to hike its cigarette taxes far beyond its neighbors, then it's the state's fault that its shop owners can't compete. It's not the fault of the consumer who makes a smart choice to cross the border and buy in bulk. Unless the product itself is illegal, the state of Tennessee has no right to interfere in that transaction.

What trips the wires of Tennessee's enforcement? As few as three cartons, according to the commissioner and Tennessee state law, which makes that a misdemeanor. Twenty-five cartons will result in auto forfeiture, between one and six years in prison for a felony conviction, and a $3,000 fine. None of this has to be predicated on an explicit act to bootleg the cigarettes, either, but merely possession of a legal product.

Tennessee wants to set itself up as a police state while, as one Republican state legislator notes, it does nothing about illegal aliens transiting the state. It demonstrates what happens when the effort to squeeze tax dollars from citizens runs out of control. The notion that an American cannot cross a state border without risking arrest for purchasing a completely legal product for his own use should be anathema to everyone across the political spectrum.

[id10t]

Tennesee is the home state of Bill Frist, a Fundie Christian like you wouldn't believe and incredibly stupid considering he's an MD...

Also, don't forget Bloombergs campaign against legal gun shops in other states...

[DonDavis]

This can't end good. sheesh!

[Neilk]

Didn't the Guliani or the New York State government send tax notices to people who bought and saved lots of money on big ticket items like washer and driers in NJ where the taxes were lower?

Technically, the smokers should have to pay a use tax on out of state purchases, although this is a bit much. How much do you want to bet that the convenience and liquor store lobby made a big stink about losing money to neighboring states, thus the beginning of enforcement?

Next up, gas tank checks to make sure you didn't purchase "cheap" gas in a neighboring state.

[mattdavis11]

Bootlegging is a serious problem that circumvents taxation and licensing laws on an individual state basis. Engaging in such activities is simply enabling lazy criminals to be employed, and the poor becoming richer. We as states need to cut off all interstate commerce and fin for ourselves. Internet commerce also needs to be addressed. These web purchasers have had more than long enough of a ride free from taxation. These actions by state authorities are paramount to the well being of the people of this great state.

It's about time!

[MRM]

It may be a bad policy idea, but there is nothing unconstitutional about it. States are allowed to tax the sales of items, especially highly regulated items such as alcohol and tobacco. It is illegal to circumvent the sales taxes on those items by buying them in other states and importing them into the state they are intended to be consumed in without paying the proper tax. States are certainly free to observe what is being purchased in neighboring states. They may or may not have the authority to make extra-territorial arrests, but they can set up stakeouts and make arrests when the smugglers cross the state line. Technically we are all supposed to keep track of what we buy on the internet and pay the state sales tax on it at the end of the year. From time to time you'll hear about some big retailer getting in trouble or their records being siezed so that the state can get at the people who bought things but didn't pay sales tax.

A few years ago a rich guy in Minnesota went to jail for avoiding state sales tax on some expensive collectible he bought out of state. He told the seller to ship it to his home in Minnesota but bill him at his ranch in a state that didn't have sales tax.

[Mule]

I'm betting on the smugglers.

[the]

I agree, it may be bad policy, but it doesn't appear to be illegal, at least as to Tenn's action within the state of Tenn regarding cigs that don't bear Tenn tax stamps (i.e., "contraband").

[MRM]

Bootlegging and smuggling have as long and rich of a history in America as does law enforcement. We're kind of a funny people that way. Half of the national collective unconciousnes thrills in the stories of the Boston Tea Party, the blockade runners, bootleggers, speakeasies and Cannon Ball Runs. The other half reveres Elliot Ness. They meet somewhere in the middle of American pop culture. Ever notice how Al Capone was half celeb/half criminal? The Kennedys don't seem to have suffered from the source of their wealth. Nascar anyone?

[the]

Originally Posted by Overpaid Slacker

First, Tennessee has no jurisdiction over what stores in other states sell, even if the material was illegal, which tobacco is not. They can't conduct surveillance in Missouri, for instance. The fact that they are "watching out-of-state stores that sell cigarettes" should be enough to demand some resignations, starting with the commissioner himself.

Second, people do have the right to cross state lines to purchase legal commodities. If Tennessee wants to hike its cigarette taxes far beyond its neighbors, then it's the state's fault that its shop owners can't compete. It's not the fault of the consumer who makes a smart choice to cross the border and buy in bulk. Unless the product itself is illegal, the state of Tennessee has no right to interfere in that transaction.

As to the first: No, Tenn does not have jurisdiction over what stores in other states sell. But they aren't claiming to have that jurisdiction, and are not claiming that other states are doing anything wrong in selling cigs. It's the act of bringing the cigs into Tenn that Tenn is complaining about. As to surveillance, it's a free country, why can't people from Tenn go and watch stores, in public areas, in Missouri? What law does that violate?

Second: People do have the right to cross state lines to purchase commodities. No one disputes that. But a state does seem to have the right to protect its own sales or use tax revenues by preventing "bootlegged" (i.e., non-taxed) items from coming in. If not, for example, there would be no automotive dealerships in high sales tax states, like California. Everyone would just take a nice trip to Oregon, pay no sales tax on their $50K car, and bring it back to Cal.

States would lose their right/ability to choose their own economic policies (i.e., high sales tax with low income tax, or low sales tax with high property tax, etc.).

Commerce Clause, etc. arguments could be raised, I suppose, but I don't think ultimately work.

[DARISC]

What happens if a Tenneseean drives to an adjacent state to pick up a couple cases of cig.s at his brother inlaw's liquor store to deliver, as a favor, to his sister inlaw's liquor store (she ran short and her bro and bro inlaw are helping her out) in an adjacent state on the other side of Tennessee (breaking no laws in the two adjacent states)?

If busted when driving into Tennessee, wouldn't they have the right to also bust commercial carriers hauling cig.s through the state?

Wouldn't profiling and other issues enter into it?

[the]

Originally Posted by DARISC

What happens if a Tenneseean drives to an adjacent state to pick up a couple cases of cig.s at his brother inlaw's liquor store to deliver, as a favor, to his sister inlaw's liquor store (she ran short and her bro and bro inlaw are helping her out) in an adjacent state on the other side of Tennessee (breaking no laws in the two adjacent states)?

If busted when driving into Tennessee, wouldn't they have the right to also bust commercial carriers hauling cig.s through the state?

Wouldn't profiling and other issues enter into it?

I don't think even Tenn is claiming that non-Tenn-taxed cigs cannot be transported through Tenn, on route to another state.

[Overpaid Slacker]

The TN law is that sales/purchases of tobacco IN TENNESSEE have to be subject to the tax. If it's a sale/purchase elsewhere, and the appropriate taxes are paid in that jurisdiction, AND there is nothing illegal about possession in TN, there is nothing proper about arresting or fining people for buying in another jurisdiction. This amounts to a tax on possession, not sale. Key distinction -- SALE vs. POSSESSION.

If the state of New York imposes a $1.25/gallon tax on gasoline (it's actually probably about that much ...) and CT imposes a $1.00/gallon tax... it's ILLEGAL for me, living on the NY/CT border, to fill my car with cheaper CT gas and drive it back into NY? I paid the tax required by law when I bought the gas. What if I fill up at the local indian reservation, where no taxes are charged? I'm not bootlegging, as I'm not re-selling.

If I own a bar and drive to the reservation once a month to buy cartons of smokes to fill up my cigarette machine, am I doing something illegal? Actually, probably ... because SALES of cigarettes in NY are subject to NY tax, and I'm re-selling.

But if I go to the reservation and buy ten cartons of smokes for my own consumption in my home over the course of the next 6 months, I can be arrested? Then it's essentially illegal for the reservations to be selling cigarettes, because they KNOW I'm not going to consume them on the reservation and their complicit and abetting my "crime". Pffft.

This is a burden on interstate commerce, plain and simple, and amounts to forcing TN residents to have to purchase cigarettes in TN, under penalty of law.

JP

[the]

Is it a burden on interstate commerce to force Californians to have to buy their cars in California (and be subject to large sales tax)?

[Overpaid Slacker]

IF CA FORCED its residents to only purchase cars in CA, it would be an unacceptable burden on interstate commerce.

If you're referring to California's different standards for automobiles safety/emissions, those fall under the purview of powers traditionally reserved to states... the so-called "police powers". In fact, CA having different automobile standards (emissions/safety/whatever) is a huge burden on interstate commerce, but it has to do with the safety/protection of Californians (a large part of the "police powers") and, as such, is not prohibited by the supremacy and commerce clauses.

The issue of taxing is not a "police power", and does not enjoy the same immunity. And CA does not force people to purchase their cars in CA -- it requires that the cars themselves meet certain standards... As a CA resident, if I want a car, I can go to NV and buy it, and bring it back to, and use it in, CA. As long as the car meets the roadworthiness/safety/emissions standards CA has set.

JP

[the]

Cars these days are "50 state compliant" for emissions and safety. So that doesn't work. It is all a sales tax issue.

California does force its residents to buy their cars in California. A Californian cannot go to Oregon, buy a car from a dealer there, and bring it back and register it in California.

Your Nevada hypo doesn't work, either. As a California resident, you cannot really go to Nevada, buy a car, and "use it" in California. As a California resident, where would you legally register it in order to be able to legally own it and drive it in California?

[304065]

First, Tennessee has no jurisdiction over what stores in other states sell, even if the material was illegal, which tobacco is not. They can't conduct surveillance in Missouri, for instance. The fact that they are "watching out-of-state stores that sell cigarettes" should be enough to demand some resignations, starting with the commissioner himself.

Agree, the STATE does not have J. I wonder who is watching out for the Citizens of the Volunteer State when its agents are watching out-of-state-stores?

Second, people do have the right to cross state lines to purchase legal commodities. If Tennessee wants to hike its cigarette taxes far beyond its neighbors, then it's the state's fault that its shop owners can't compete. It's not the fault of the consumer who makes a smart choice to cross the border and buy in bulk. Unless the product itself is illegal, the state of Tennessee has no right to interfere in that transaction.

Agree in part, they have the right to go elsewhere. But when you buy a used car in California and have it shipped to New York, in order to register it in New York you have to pay sales tax, unless you can prove you paid sales tax in another state, and if its tax rate is lower, you pay the incremental rate in New York.

Similarly, why can't Tennessee levy a use tax on property purchased elsewhere and brought into the state? They certainly can. An analogy at the Federal level is the payment of use tax for goods purchased over the Internet when no sales tax was paid.

Tennessee wants to set itself up as a police state while, as one Republican state legislator notes, it does nothing about illegal aliens transiting the state.

That is argumentation Tu Quoque of course, you have to start somewhere. But I understand the point, which is that there's all kinds of income tax evasion going on and yet the Executive chooses to focus on the low-hanging fruit.

What's really going on here is that they are trying to tax cigarette smoking out of existence by raising the cost and generating money for state coffers at the same time.

[the]

Originally Posted by john_cramer

What's really going on here is that they are trying to tax cigarette smoking out of existence by raising the cost and generating money for state coffers at the same time.

Not quite sure who you are referring to with "they," but is Tenn. really trying to get rid of cig smoking? I never thought of Tenn as an anti-tobacco state.

[stevepaa]

Actually, a CA resident can buy a new car in another state and bring it to CA, but cannot normally get it registered.

http://www.arb.ca.gov/msprog/NonCAVeh/NonCAVeh.pdf


Used cars must pass smog tests.

[scottmandue]

Are there any Indian reservations in Tn.? Can we start one? Anyone know some native Americans in Tn.? We could sponsor them!

We are going to be rich!