The Interactive Great American Taxing Game: Tobacco
It’s the Great American Taxing Game and you have chosen to tax cigarettes to be paid by cigarette suppliers. Who actually bears the burden of the tax? Because smokers are pretty unresponsive to price changes, they are most likely to pay. This is not necessarily a bad thing: smokers pay higher prices and the government collects the revenue. But, does it work at all levels? Your host Prof. Art Carden demonstrates why cigarette taxes are not particularly effective at the state or local levels. Don’t forget to see what would happen if you chose to tax oil companies or luxuries instead.
The Crusade for Politically Correct Consumption [article]: This FEE article discusses how the push for sin taxes invites pork-barrel politics and stems from puritanical elitism.
A Higher Gasoline Tax Will Solve Everything? [article]: Another FEE article compares gas taxes to sin taxes, arguing that they are ultimately paternalistic measures.
Luxury Tax [encyclopedia entry]: A definition and history of the luxury tax.
The Effect of Tax Changes on Consumer Spending [report]: The New York Federal Reserve reports on the impact of taxation on consumer behavior.