Policy Watch: Alcohol and Cigarette Taxes
Author(s) -
Michael Grossman,
Jody L. Sindelar,
John Mullahy,
Richard Anderson
Publication year - 1993
Publication title -
the journal of economic perspectives
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 9.614
H-Index - 196
eISSN - 1944-7965
pISSN - 0895-3309
DOI - 10.1257/jep.7.4.211
Subject(s) - excise , alcohol , alcohol consumption , tax revenue , economics , revenue , tax policy , public economics , consumption (sociology) , administration (probate law) , tax deferral , tax reform , business , finance , state income tax , political science , macroeconomics , gross income , law , social science , biochemistry , chemistry , sociology
Increased excise taxes on cigarettes and alcohol have been suggested as a means to finance (at least partially) the Clinton administration's proposed program of health care reform. We consider the revenue potential of cigarette and alcohol tax hikes and explore the effects on consumption and related outcomes. We present estimates of the social costs and implied optimal tax rates on cigarettes and alcohol. The bulk of the evidence presented here does support higher taxes on cigarettes and alcohol.
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