Do the Effects of Alcohol Excise Taxes Differ by Drinking Level and by Income Level?

Henry Saffer (), Markus Gehrsitz and Michael Grossman

National Tax Journal, 2024, vol. 77, issue 4, 787 - 811

Abstract: We study the effect of excise alcohol taxes on ethanol consumption and prices paid for alcohol purchases. For our analysis, we exploit an unexpected and large increase in excise taxes that substantially raised alcohol prices in the state of Illinois in 2009. We combine rich, nationally representative household-level data on alcohol purchases with a synthetic control approach that allows us to compare prices paid and purchasing behavior in Illinois with the same behaviors in a weighted set of control states. We show that heavy and moderate drinkers reduced their ethanol consumption by a similar magnitude, thus casting doubt on the notion that heavy drinkers are less responsive to higher alcohol taxes. We also find similar responses for low- and high-income households but document that low-income households pay more for ethanol after tax increases, thus supporting concerns about the regressive nature of alcohol taxes.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1086/732146 (application/pdf)
http://dx.doi.org/10.1086/732146 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:nattax:doi:10.1086/732146

Access Statistics for this article

More articles in National Tax Journal from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().