When you hear the word “income tax,” you probably think of something the IRS takes out of your paycheck. Or you might think of something they take out of an inheritance. But taxes affect virtually every financial transaction you make. Take, for example, that simple jar of honey lurking on the shelf in your refrigerator.
Americans eat more honey than anyone else in the world — about 400 million pounds of it a year. Most of it goes towards sweetening foods like cereals, cookies, and breads. Even whiskey producers are adding honey to their blends to attract younger drinkers. (The Scotch Whiskey Association just stung Dewars for labeling their new “Highlander Honey” as “scotch” rather than “spirit drink.”)
Where does all that honey come from? Well, China is the world’s largest honey exporter. But Chinese beekeepers sometimes use pesticides banned here in the U.S. They sometimes dry their honey by machine, which lets the bees produce more, but leaves the honey with a foul taste similar to sauerkraut. Worst of all, Chinese producers sell their honey at prices as low as half of what our domestic producers charge.
Back in 2001, the U.S. government slapped Chinese honey with punitive tariffs, currently set at $2.63/kilogram, to protect American producers. Those taxes can triple the cost of Chinese honey. So today, about 40% of our honey comes from here in the U.S., with the rest coming from Argentina, Brazil, Canada, and other countries.
What’s a poor Chinese beekeeper to do? Enter the “honey launderers.” Chinese producers send their honey to nearby countries like Malaysia, Vietnam, India, or Korea, and re-label it as coming from those countries. They add rice sugar, molasses, or fructose syrup to hide any unpleasant tastes or smells. (Ick.) They filter the honey to remove the pollen, which palynologists, or pollen specialists, can use like a natural “fingerprint” to track down a honey’s origin. And they pocket the savings they create by evading the tax.
How much tax does the illicit honey avoid? A lot. Back in 2008, Immigration and Customs Enforcement officials charged 14 people with a globe-trotting scheme to evade $80 million in payments. And in February of this year, officials busted two of the nation’s biggest suppliers for evading $180 million more. In a scene reminiscent of Donnie Brasco, officials launched “Operation Honeygate” and planted an agent “on the inside” for a year. The agent served as one supplier’s director of procurement, and the investigation led to five individual guilty pleas, two deferred prosecutions, and $3 million in fines.
What’s the lesson? Taxes are baked into the price of everything you buy, whether they’re even paid or not!
There’s not much we can do to help you avoid hidden tariffs on baked goods. Fortunately, Tax Cutters can help with the taxes that really count — taxes on your income, your payroll, and even your estate. If you’re busy as a bee, you deserve to keep everything the law allows. So call us for the plan you need — and remember, we’re here for everyone else in your hive!