Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity

Jacob Goldin and Tatiana Homonoff

American Economic Journal: Economic Policy, 2013, vol. 5, issue 1, 302-36

Abstract: Recent evidence suggests consumers pay less attention to commodity taxes levied at the register than to taxes included in a good's posted price. If this attention gap is larger for high-income consumers than for low-income consumers, policymakers can manipulate a tax's regressivity by altering the fraction of the tax imposed at the register. We investigate income differences in attentiveness to cigarette taxes, exploiting state and time variation in cigarette excise and sales tax rates. Whereas all consumers respond to taxes that appear in cigarettes' posted price, our results suggest that only low-income consumers respond to taxes levied at the register. (JEL D12, H22, H25, H71, L66)

JEL-codes: D12 H22 H25 H71 L66 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/pol.5.1.302
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Citations: View citations in EconPapers (70)

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Related works:
Working Paper: Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity (2011)
Working Paper: Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity (2010)
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