The Micro-geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago

David Merriman ()

American Economic Journal: Economic Policy, 2010, vol. 2, issue 2, 61-84

Abstract: The large tax differentials between Chicago and neighboring jurisdictions provide an incentive for cigarette tax avoidance. Data from a random sample of cigarette packs littered in Chicago reveals a startling degree of tax avoidance: three-quarters did not display a Chicago tax stamp. Also, the $2.68 difference between the tax in Chicago and surrounding counties decreases the probability of a local stamp by almost 60 percent, and a one mile increase in distance to the lower-tax state border increases the probability a pack of a local stamp by about one percent. These results are consistent with the predictions of economic theory. (JEL H25, H26, H71)

JEL-codes: H25 H26 H71 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/pol.2.2.61
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Citations: View citations in EconPapers (49)

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