Voters in California have rejected much lower cigarette taxes twice in the last decade.   But the SEIU, and other California unions, have an insatiable appetite for public tax dollars.  Funding their pet programs seems to take priority over other, more pressing, social concerns.

DeLeon’s  SB 768 also opens the door to smugglers to break the law and divert revenue from California government that could otherwise be used to pay for education, public safety and social programs.   Recent news articles suggest that this is a huge problem across the country, and in California.  Once the door is open to the extremely lucrative smuggling trade, it will be difficult to close.  And then who will pay the cost of law enforcement to combat this problem: the taxpayer – not Senator Deleon and not the SEIU.

Wanna make a quick $1,944,000? Buy a truckload of cigarettes in Virginia and sell them in New York.

Yeah, it’s illegal. But that’s how much can be made from selling a tractor trailer’s worth (that’s 800 cases, each holding 600 packs of cigarettes) of low-tax Virginia cigarettes in high-tax New York, based on estimates from the Bureau of Alcohol, Tobacco, Firearms and Explosives.

And that’s exactly what criminals are doing.

In 2011, more than 60% of all cigarettes sold in New York were smuggled in from another state, according to the Mackinac Center for Public Policy, a free-market think tank. That’s up from about 36% in 2006.

It’s not just happening in New York. Mackinac says 15 states have smuggling rates that top 20%. Add in counterfeit cigarettes from overseas, and ATF estimates the lost government revenue at more than $5 billion a year.

The unseen cigarette-tax crime wave

Sophisticated criminal organizations have one incentive: money. They find a need and fill it. It doesn’t matter whether the product is narcotics, prostitution or terror, the goal is the same; more money.
They use that money to fund their other illegal activities.

As a result of rising tobacco taxes across the country, these organizations are increasingly moving to cigarette smuggling for the potential profit. Cigarette-related crime is rising across the U.S. In California,
1.4 billion packs were estimated to have been consumed in fiscal year 2005-06. And 209 million packs were estimated to have been sold tax-free, resulting in a $182 million revenue loss for the state. That’s more than the general fund budget for Huntington Beach.

Cigarette-Smuggling & Links to Terrorists:

As a direct result of these cigarette tax schemes militant groups are using the law as an avenue to raise funds only to be used to attack Americans both here and abroad…

Cigarette-smuggling ring investigated for terror ties

A $55 million cigarette-smuggling ring that cheated several East Coast states out of sales tax dollars could be tied to terrorist groups, authorities said.

They made the claims during Thursday’s indictment of 16 Palestinian men — some of whom have known ties to convicted terrorists, CNN reported. The cigarette-smuggling operation ran through New York, Maryland, Delaware, Virginia and New Jersey.

The funds from the operation haven’t all been tracked. But investigations of similar scams have found that the money was often sent to terrorist groups, including Hamas and Hezbollah, New York Police Commissioner Ray Kelly said, in CNN.

The current case, in fact, actually stemmed from New York’s ongoing watch for terrorism, he said.

“We discovered that individuals who were on our radar for links to known terrorists were engaged in a massive raid on the New York Treasury in the form of cigarette-tax avoidance,” Mr. Kelly said, in the CNN report. “One of the suspects had financial ties to Omar Abdel-Rahman, the blind cleric serving a life sentence for a conspiracy to blow up New York City landmarks.”

New York Attorney General Eric Schneiderman said investigators are still tracing the “astounding profits” from the operation and uncovering any ties to terrorism groups, CNN reported.

Additionally, NY cigarette-smuggling ring may have terror link

New York (CNN) — A cigarette smuggling scheme that cost New York state millions of dollars in sales tax revenue may have raised funds for militant groups, authorities said.

Sixteen Palestinian men, some with ties to convicted terrorists, were indicted Thursday in the alleged scheme that spans New York, Maryland, Delaware, Virginia and New Jersey states.

Investigators say they uncovered $55 million in illegal cigarette sales.

Although it is unclear where the illicit proceeds ended up, similar schemes have funded organizations such as Hamas and Hezbollah, according to Ray Kelly, commissioner of the New York Police Department.

“This case started because we were being vigilant about terrorism,” Kelly said in a statement. “We discovered that individuals who were on our radar for links to known terrorists were engaged in a massive raid on the New York Treasury in the form of cigarette tax avoidance.”

One of the suspects had financial ties to Omar Abdel-Rahman, the blind cleric serving a life sentence for a conspiracy to blow up New York City landmarks.

New York Attorney General Eric T. Schneiderman said authorities are still working to trace the “astounding profits” generated by the scheme.

California must not be permitted to make the same mistake by allowing politicians like Kevin Deleon to blindly run headlong into “feelgood” legislation without taking into account the law of unintended consequences, namely, the criminal black-market it creates and another revenue stream for terrorists and thugs that mean us harm.

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In 2010, Thomas Woods almost single-handedly resurrected the history of nullification, triggering a tide of controversy that is still washing over the American political scene. In Nullification: How to Resist Federal Tyranny in the 21st Century, Woods handed us long-ignored primary source documentation; succinctly helped us to understand their meaning and implications; and deftly cleared away gross misinformation around nullification’s purported relationship to confederacy and slavery.  He kick-started the arduous process of navigating around political zombies so that Americans could start to see nullification as the powerful tool it is in reclaiming and maintaining states’ rights.

Now, via Our Last Hope, Maharrey has taken the next steps in making nullification even more accessible to a popular audience.  Breaking nullification and its implementation into simple, memorable terms, he facilitates an easy embrace of nullification not just as a useful tool but as a truth revealed – much as if it were a basic mathematical formula: When the federal government reaches beyond its proper constitutional authority, remember who’s in charge and just say no.

With great effectiveness, Maharrey underscores the simplicity and power of this equation from the start by means of a resonant metaphor: What happens when your teenaged daughter comes downstairs in the morning wearing something too immodest in which to be seen out and about?  Do you sit back and let her do whatever she pleases, or do you exercise your authority and insist that she march upstairs to change into something more appropriate before leaving the house?  Anyone who has half a clue about responsible parenting immediately knows the answer.

The American system of government described in our founding documents places the people and the states in authority.  We are the parents, charged with the solemn duty of ensuring that the federal government behaves according to its constitutionally established limits – our family rules.  Yet, we have forgotten and no longer recognize the authority that we hold, Maharrey points out. Only when we remember, claim, and actively exercise our rightful authority can we begin to tame the unruly child that is our federal government – the child that has now convinced itself and many of us that it is the parent.

Maharrey doesn’t just deliver the formula, he helps us understand it, builds solid historical and logical cases around it.  For example, walking us through the historical circumstances and documents that gave birth to initial expressions of nullification, he goes one better. He explains that even had James Madison and Thomas Jefferson, respectively, never written the concept into the Virginia and Kentucky Resolutions, nullification was actually a solution inherent to and fully spelled out within our American form of government, just waiting to be leveraged in the inevitable event that government would attempt to slip its moorings. Maharrey points us, in particular, to words taken straight from Virginia’s ratification of the United States Constitution.

Now, the interesting thing about ratification of the Constitution, as Maharrey points out, is that each state ratified separately. Moreover, each state’s ratifying instrument spelled out the specific conditions under which its people would ratify the Constitution and enter into the union. When accepted by the other states, these ratifying instruments each became binding on all states in the union, not just on the state that had submitted the instrument.  All states were thus bound by Virginia’s ratifying instrument, which stipulated personal sovereignty – that the powers granted under the Constitution derived from the people and could be resumed by them whenever those powers became perverted to the injury or oppression of the people.

If the Principles of ‘98 are at the heart of Woods’ Nullification, I would argue that Virginia’s ratification language is the very soul of Maharrey’s book. It’s not that Woods doesn’t address the Virginia ratifying instrument. He does. But Maharrey plants a flag in it and shouts, “This way to liberty, everyone!  The constitutional justification for nullification that’s supposedly lacking…?  It’s right here!”

While the whole of Our Last Hope is engaging and enjoyable to read – woven through with popular references from Ghostbusters and Monty Python to chess and football – it is in its consideration of the Virginia language that Maharrey’s book inspires and empowers. States’ rights are nothing if not a powerful bulwark against the infringement of individual rights, but it is personal sovereignty itself that lies at the foundation of the whole American experiment – and on which Maharrey ultimately focuses his efforts to greatest effect.  No wonder then that the final chapter of the book, which exhorts the reader to do the work of nullification, almost feels unnecessary.  While the last chapter contains practical information, by the time the reader arrives there, Maharrey has likely already persuaded him not only to act rationally and enthusiastically in the interest of his own personal liberty but also to contend with any necessary challenges.

While they say there is no such thing as a perfect analogy, many of Maharrey’s come darned close.  It’s a great boon, the apparent ease with which he couches the various aspects of his subject in terms the reader will not only understand but appreciate and often even have a good chuckle over. There was only one analogy that didn’t work for me, but that’s likely because it involved football, and I’m the closest one gets to sports illiterate.  All in all, through the use of verbal illustration, the presentation of targeted primary source material, and the crystallization of ideas, Maharrey has written a work that is truly accessible to everyone…exactly what is needed.

Admirably, Maharrey also strives to keep his book on non-partisan footing.  Liberty is not, in fact, a partisan ideal. The more that we can strip away false oppositions and build bridges in the fight for personal freedom, the better off we will all be.  On this score, to nitpick just a bit, Maharrey’s use of the word progressive early on in the book seems a little too tied to Democratic policies, which might put off some readers. There are, after all, big-government progressives on both sides of the two-party “divide.”  However, if the reader sticks with Maharrey to the end, it becomes abundantly clear that he sees in both major parties an ongoing willingness to bastardize the Constitution and compromise personal liberty.

Our Last Hope is available through the Tenth Amendment Center and on Amazon in both print and Kindle versions.

If I might make a suggestion, don’t just pick up a copy for yourself… Grab one for any state officials you know who may be looking for justification to take a stand for individual and states’ rights…or who you think might be persuadable.  Don’t forget to highlight the passages about the Virginia Ratifying Instrument.

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We’re completely unprepared for the coming “age wave.” More than 15 million Americans will be 85 years or older in 2040. While seven in 10 seniors will need some type of long-term care (LTC) during their lives, only one in 10 has private LTC insurance coverage. Almost 14 million seniors could suffer from Alzheimer’s in 2040, and the annual rate for a private nursing home room continues climbing, reaching $81,030 in 2012.

Research shows many Americans mistakenly believe they have LTC coverage through Medicare when they do not. The misinformation puts their retirement plans at risk. Without change, millions of middle-class baby boomers will turn to a welfare program, Medicaid, to finance these needs.

The authors of Obamacare pretended to solve Medicaid’s LTC financing problems by creating the Community Living Assistance and Support Services (CLASS) program, a national entitlement, promising a daily cash benefit to disabled Americans. The program failed because liberals promised the impossible: a self-funded, fiscally sound program that prohibits underwriting without forcing healthy Americans to participate. As it fell apart, Senator Tom Harkin (D-IA) criticized CLASS because “it’s voluntary.”

Less supportive Democrat Senators called it a “Ponzi scheme.” And the Congressional Budget Office (CBO) warned it would “inevitably add to future deficits (on a cash basis) by more than it reduces deficits in the near term, even though the premiums would be set to ensure solvency of the program.”

Aggressive congressional oversight forced Department of Health and Human Services (HHS) Secretary Kathleen Sebelius to concede the program was unsustainable and admit she lacked legal authority to rewrite the program. HHS attorneys warned CLASS could leave some enrollees “worse off” or unable to “recoup their paid premiums” once it failed due to legal challenges.

The Secretary stopped implementation, but she defied commonsense by urging Congress to keep the budget-busting program on the books. When Senate Democrats finally agreed to repeal CLASS, they replaced it with a flawed commission and tasked its Democrat-appointed majority with producing a plan in September. Congress should reject any recommendations for CLASS 2.0. We can’t afford a new mandatory, publicly funded LTC entitlement.

Instead, lawmakers should listen to the Government Accountability Office and better inform middle-class baby boomers of their probable need for LTC and the fact Medicare won’t cover it. This gives patients and caregivers time to plan ahead. Unfortunately, the Obama Administration refuses to improve its taxpayer-funded efforts to increase Americans’ awareness of this problem and has rejected calls to work with state governors to expand private LTC coverage. Liberal advocacy groups have long opposed this approach, preferring to force Americans to pay into a new federal program. Like CLASS, it would collapse under empty promises years before a shrinking group of American workers struggles to fund Medicare and service interest on the debt in 2040.

CLASS and the commission are distractions. We won’t solve our LTC problem without reforming Medicaid, our nation’s default LTC program. Medicaid LTC spending has grown at an annual rate of 6.5 percent since 1995. According to the CBO, federal spending in this area will top $1.1 trillion annually in 2021.

States also struggle as increased Medicaid spending crowds out other budget priorities, and they blame federal rules, allowing individuals with substantial assets to enroll in this welfare program. In a letter to Congress, the state of Virginia writes “the federal government should give states greater flexibility to consider assets when determining eligibility for LTC coverage through the Medicaid program.” The state of Wisconsin agrees this will “help ensure the long-term sustainability of such programs for their residents in most need of government assistance.” Federal rules force states to disregard more than a half million dollars in home equity and the entire amount of other valuable assets during enrollment.

Making matters worse, the 2010 law prohibits states from tightening loopholes that allow welfare abuse. Virginia provides an example of a Medicaid applicant who purchased a $900,000 annuity, naming his wife the beneficiary of $89,000 per month. Obamacare forces Virginia to ignore this income when deciding eligibility.

Why should Medicaid allow middle-income and upper-income Americans to have their LTC financed by taxpayers so they can pass inheritances along to their children? Since 2000, seniors’ home equity grew by 50 percent, reaching $3.2 trillion in 2013. Easy access to welfare is unsustainable, and it creates no incentive to protect assets with LTC insurance or to use a home-equity conversion for LTC needs. Tighter restrictions won’t force seniors out of their homes, and federal law helps them appropriately protect these assets from Medicaid estate recovery through a program Congress expanded in 2005.

To protect Medicaid for poor Americans, we recently introduced the Medicaid Program Integrity Act. The bill would give states the option to reduce the Medicaid home equity exemption as low as $50,000. It would also eliminate Obamacare’s Maintenance of Effort rules, preventing states from closing loopholes allowing Medicaid abuse.

Congress should reject CLASS 2.0, encourage personal responsibility, and protect Medicaid for those it was intended to protect. Ultimately, this will give middle-class Americans greater choice, independence, and control over the long-term care services they need in a setting of their choice.

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