Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity

Jacob Goldin and Tatiana Homonoff
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Jacob Goldin: Princeton University

Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: Recent evidence suggests consumers pay less attention to commodity taxes that are levied at the register than to taxes that are 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, only low-income consumers respond to taxes levied at the register.

Keywords: cigarette taxes; tax burden; smokers; consumer habits (search for similar items in EconPapers)
JEL-codes: D12 H22 H25 H71 L66 (search for similar items in EconPapers)
Date: 2011-08
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Related works:
Journal Article: Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity (2013)
Working Paper: Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:561a

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