SPECIAL-INTEREST SPILLOVERS AND TOBACCO TAXATION

Adam Hoffer

Contemporary Economic Policy, 2016, vol. 34, issue 1, 146-157

Abstract: type="main" xml:id="coep12116-abs-0001"> This study explores the effects tobacco special interest has had on cigarette tax rates. Using a spatial econometric model to control for tax competition and the endogeneity present in state tax rates, this study finds that tobacco special interest has played a significant role in influencing state cigarette tax rates. Pounds of tobacco grown in a state and tobacco industry campaign contributions are associated with lower cigarette tax rates. The empirical results show that the magnitude of the special-interest effect can be two to five times as large when the spatial spillover effects are included. (JEL C23, H71, H73)

Date: 2016
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