Inmendham on cigarette taxes

Inmendham has repeatedly said the taxes on cigarettes are 800%.  Cigarette taxes are high, but are they anywhere near that high? I tried politely to post the argument that they are not on his channel, but he blocked me and removed all trace of the posts I had made. 

He tells us the cost of name brand cigarettes is at least $7/pack in New Jersey and the cheapest ("no-name"?) packs are $6.50.    I looked up the excise taxes, federal and state, and the NJ sales tax, which I believe to be all the taxes on cigarettes there.   I then computed a tax rate of 146% and 190% for the $7 pack and the $6.50 pack respectively.  High, but a long way from the claimed 800%.

So now Inmendham says that the part of his "taxes" that is taxes is only 500% and the other 300% is things like lawsuit settlements that the tobacco companies have been forced to pay out to the government, and which they "pass on" to the consumer.  Okay, but those are not taxes.  Nevertheless, if we take his word for all this, the taxes are 500%, but I compute 146% on the cheapest brand-name cigarettes.

Inmendham claims the retail "fair market cost" cigarettes would be only $0.75.  But where does he get this from?  In his latest video  (09 Jan 2013) he cites some website (not clear why this site is an authority) which apparently gives some cost figure like this for "the cost of production".

However, "the cost of production" is not the retail cost.  There are many other costs that are included in a retail cost.  Advertising, retail markups, profits.

Perhaps a more authoritative site would be the tobacco companies themselves.  They are unlikely to undercount the amount of money that is going to the government!  So I looked at one of these sites at http://www.rjrt.com/statemsapayments.aspx.

Note that it doesn't talk at all about "taxes" but instead "government profits".  That is a very strange phrase to use for government monies.  Based on the main link to this page, it appears that this phrase refers to the sum of taxes and what they call "tobacco settlement payments" -- presumably those monies the companies have been forced to pay as a result of lawsuits (what Inmendham says makes up 300% of his "taxes").

Here are the numbers for New Jersey:   Government: $5.38 (68%), Cost of manufacture: $1.20 (15%) Markup: $.94 (12%) Profit: $.40 (5%).

This gives a retail price of $7.89, higher than Inmendham's, but working with it, we find that the "tax" (in his words) is 68/32 or 213%.

So according to RJReynolds, the entire government take from the cost of a pack of cigarettes in NJ is 213%, not 800%.

We could compute the percent take for the cheaper cigarettes, and also estimate how much is tax versus settlement payments, but for now, this is pretty useful information.