The Incidence of Tobacco Taxation: Evidence From Geographic Micro-Level Data

Andrew Hanson and Ryan Sullivan

National Tax Journal, 2009, vol. 62, issue 4, 677-98

Abstract: This paper uses a recent increase in Wisconsin’s tobacco tax as a natural experiment to measure the economic incidence of tobacco taxation, using micro-level data on cigarette prices from retail locations in Wisconsin and states that share its border. We find that Wisconsin’s $1 tobacco tax increase was over-shifted to consumers; they pay the entire amount of the tax as well as a premium of between 8–17 cents per pack of cigarettes. We also use geo-coded data to test if the incidence of the tobacco tax is different for locations near the border of states with different tobacco taxation.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:62:y:2009:i:4:p:677-98

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