Cigarette Taxes and Smuggling
A Statistical Analysis and Historical Review
In this study, the authors consider cigarette smuggling from two angles. First, they employ a statistical model to estimate the degree to which cigarette smuggling occurs in 47 of the 48 contiguous U.S. states. Second, they review the historical experiences of three states — Michigan, New Jersey and California — known to have problems with cigarette smuggling. The author's findings suggest that state policymakers should reassess the value of cigarette taxes as a revenue and public health tool.
Contents
- Executive Summary
- Introduction
- Statistical Analysis
- Historical Review
- Case Study: Michigan
- Smuggling and Other Unintended Consequences of Cigarette Taxation
- Michigan's Experience With Cigarette Taxes: The 1940's and 1950's
- The 1960's: The Tax Rate Increases
- The 1970's: More Aggressive Attempts to Fight Smuggling
- The Interstate Revenue Research Center
- Increased Federal Involvement in Fighting Cigarette Crime
- Tax-Exempt Cigarette Sales on Indian Reservations
- Tax-Exempt Cigarette Sales on Military Bases in Michigan
- The 1980's and C.A.T.C.H.
- Michigan From 1990 to the Present
- Counterfeit Tax Stamps
- Theft
- Smaller Thefts and Violence
- Internet Sales
- Conclusion
- Case Study: New Jersey
- The Many Ways of Finding a Tobacco Bargain
- New Jersey's Tax Differentials With Surrounding States
- New Jersey's Seven Decades of Tobacco Taxation
- A Key Supplier of Cigarettes to Other States During the 1940's
- Organized Crime Complicates Tax Administration in the 1950's
- Tax Hikes During the 1960's and Early 1970's
- Two Decades of Relative Calm: The Late 1970's Through the Late 1990's
- The Last 10 Years: Tax Hikes and Internet Shopping
- Conclusion
- Case Study: California
- California's Cigarette Tax Rate
- California's Experience With Cigarette Taxation
- Reservation Sales During the Late 1970's
- The 1980's and Proposition 99
- The 1990's: California's Tax Evasion Escalates Dramatically With Internet Sales and Proposition 10
- Ancillary Crime
- The Rise of Foreign Suppliers
- Proposition 86
- More Law Enforcement Initiatives
- Case Study: Michigan
- Assessing Cigarette Taxes
- Appendix A: The Econometric Analysis
- Appendix B: Prohibition in Michigan and the Avenue de Booze
- Author Acknowledgments