The incidence of tobacco taxation: Evidence from geographic micro-level data
Publication Source
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National Tax Journal
Journal article
Metadata
Region
The Americas
Economy status
High-income economies
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.