Taxing Firearms Like Alcohol or Tobacco

Eisenhauer Joseph G. ()
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Eisenhauer Joseph G.: College of Business Administration, 2966 University of Detroit Mercy , 4001 W. McNichols Road, 48221-3038, Detroit, USA

The B.E. Journal of Economic Analysis & Policy, 2024, vol. 24, issue 3, 835-845

Abstract: Despite recent calls for increased taxation of firearms, there has been little quantification of the impact that this would have on the market. Using tax receipts and recent estimates of supply and demand elasticities, this paper measures the size of the U.S. gun market at equilibrium, and the effects of current and higher tax rates. Baseline estimates indicate that market equilibrium is $14.11 billion and current taxes reduce sales by 14.5 percent. Taxing firearms at rates comparable to taxes on alcohol would cut sales to roughly three-quarters of equilibrium and increase tax revenue by 58 percent; raising gun taxes to the rate on tobacco would reduce sales to about half of the equilibrium level and double federal tax revenue.

Keywords: Firearms and Ammunition Excise Tax; gun market equilibrium; price elasticity of firearms; federal tax revenue (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejeap-2023-0275

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