The Micro-geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago
The large tax differentials between Chicago and neighboring jurisdictions provide an incentive for cigarette tax avoidance. Data from a random sample of cigarette packs littered in Chicago reveals a startling degree of tax avoidance: three-quarters did not display a Chicago tax stamp. Also, the $2.68 difference between the tax in Chicago and surrounding counties decreases the probability of a local stamp by almost 60 percent, and a one mile increase in distance to the lower-tax state border increases the probability a pack of a local stamp by about one percent. These results are consistent with the predictions of economic theory. (JEL H25, H26, H71)
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Volume (Year): 2 (2010)
Issue (Month): 2 (May)
Pages: 61-84
| Handle: | RePEc:aea:aejpol:v:2:y:2010:i:2:p:61-84 |
| Note: | DOI: 10.1257/pol.2.2.61 |
| Contact details of provider: | Web page: https://www.aeaweb.org/aej-policyEmail: More information through EDIRC
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