Case Study in Taxation Cigarette Taxes. Estimating US Tax Revenue from Cigarettes Taxes State Utah Maryland California Michigan New York Year 1997 1999.

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Presentation transcript:

Case Study in Taxation Cigarette Taxes

Estimating US Tax Revenue from Cigarettes Taxes State Utah Maryland California Michigan New York Year Price increase 92 % 83 % 135 % 200 % 98 % Sales Decline % % % % % Elasticity

Estimating US Tax Revenue from Cigarettes Taxes State Utah Maryland California Michigan New York Year Price increase 92 % 83 % 135 % 200 % 98 % Revenue Increase (%) 86 % 53 % 91 % 140 % 57 % Revenue Increase($millions) $22 $68 $555 $341 $365

Incidence of Cigarette Taxes Quantity0 Price D S Tax The incidence of the tax falls more heavily on consumers... than on producers. Price without tax Price buyers pay Price sellers receive

Cigarette Taxes Around the World Tax as Percentage of Price per Pack

Cigarette Taxes in the EU Tax as % of price/pack Cigarette tax Ad valorem tax

US Smoking Rate, by Income % of adult population < $15,000 $15,000 – $24,999 $25,000 – $34,999 $35,000 – $49,999 > $50,000

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