Alumni Ties Expose Tax Loophole

 

By Ruth Jacobs
 

A connection that started in The Heights freshman year and continued in the Echo newsroom led to national headlines, a New York Times editorial condemning tobacco companies for exploiting a tax loophole, and a senator’s call for action.

pipe tobaccoIn the regular process of tracking numbers at Oregon Department of Health, Daniel Morris ’00 found a huge spike in pipe tobacco production following a tax increase on roll-your-own cigarette tobacco. “At first I thought it was a mistake,” he said.

After confirming the numbers, he called Associated Press reporter Matt Apuzzo ’00, a friend from Colby.

“Over the years I’ve pitched a couple different stories to Matt,” said Morris, who was managing editor at the Echo when Apuzzo was editor. “This is the first time that I actually got a good one to him.”

Good indeed. Apuzzo’s reporting revealed that, following an expansion of children’s health insurance this spring that increased the tax on roll-your-own tobacco from $1.10 to $24.78 a pound, tobacco companies relabeled roll-your-own tobacco as pipe tobacco, which is taxed at just $2.83 a pound.

The story ran in papers from Boston to Chapel Hill and inspired editorials nationwide. “Obviously the new law is in urgent need of a no-nonsense amendment to bring roll-your-own under proper federal controls and full taxation,” wrote the New York Times.

Senator Frank Lautenberg of New Jersey issued a press release. “It is bad enough that they are exploiting this loophole, but to make matters worse, they are cheating the government out of tax dollars needed to keep America’s children healthy. If companies won’t do what is right, then we will—by working to close this loophole.”

Apuzzo’s reporting found companies circumventing as much as $32 million a month in taxes—revenue that may now be recovered, thanks in large part to this Colby connection.
 
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