Paper Topic: Cigarette Taxes
Cigarette taxes are a hot topic. All 50 state governments have enacted taxes on cigarettes, and many have raised their taxes several times. Cigarette taxes are a way governments can achieve two social objectives. The first objective is to reduce the number of citizens who smoke. The government issuing the cigarette tax hopes that the rise in the cost of a package of cigarettes will induce people to quit smoking. The second objective is to raise government revenue. A cigarette tax, like any other tax, increases the amount of revenue governments can spend on social programs.
Issues you should address in your cigarette tax paper:
1. Will cigarette taxes have the desired effect of reducing the demand for cigarettes? What impact is there upon supply? Examine changes in price and quantity equilibriums.
2. Do increases in cigarette taxes have any other effects?
3. What are the distributional effects of cigarette taxes? Who pays for the bulk of the taxes: richer citizens or poorer citizens?
4. What do governments spend cigarette tax revenues on? How much of the tax collected goes to programs designed to help people to stop smoking? How much of it goes to increased health care costs due to smoking?
The following sources may be helpful:
• State Excise Tax Rates on Cigarettes
Newspaper and Magazine Articles on Cigarette Taxes
• USA TODAY - States Consider Cigarette Tax Hike
• Portland Business Journal - Cigarette tax measure may have unintended consequences
Policy Papers on Cigarette Taxes
• Mackinac Center for Public Policy - The Unintended Consequences of Cigarette Tax Hikes
• National Center for Policy...