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The incidence of tobacco taxation: Evidence from geographic micro-level data

Publication Source

Hanson, A., Sullivan, R. 2008

Publication Title

National Tax Journal

Publication Type

Journal article

e-lib-feature-image

Metadata

Region

The Americas

Economy status

High-income economies

Tags United States, Journal article, High-income economies, The Americas

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Abstract

This paper uses a recent increase in Wisconsin's tobacco tax as a natural experiment to measure the economic incidence of tobacco taxation, using micro-level data on cigarette prices from retail locations in Wisconsin and states that share its border. We find that Wisconsin's $1 tobacco tax increase was over-shifted to consumers; they pay the entire amount of the tax as well as a premium of between 8-17 cents per pack of cigarettes. We also use geo-coded data to test if the incidence of the tobacco tax is different for locations near the border of states with different tobacco taxation.