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Using Littered Pack Data to Estimate Cigarette Tax Avoidance in Nyc

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  • Howard Chernick
  • David Merriman

Abstract

Using data on tax stamps obtained from random samples of littered packs of cigarettes, collected once before and three times after a June 2008 New York State tax increase, we find that baseline New York City tax avoidance is high relative to national estimates, and that rates of avoidance are particularly high in neighborhoods with high levels of poverty and in relatively close proximity to a Native American reservation. The share of littered packs with no tax stamp increased from 15 to 24 percent after the tax increase. We find that in addition to the large increase in avoidance, cigarette consumption declined.

Suggested Citation

  • Howard Chernick & David Merriman, 2013. "Using Littered Pack Data to Estimate Cigarette Tax Avoidance in Nyc," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(3), pages 635-668, June.
  • Handle: RePEc:ntj:journl:v:66:y:2013:i:3:p:635-668
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    References listed on IDEAS

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    1. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-742, August.
    2. Stehr, Mark, 2005. "Cigarette tax avoidance and evasion," Journal of Health Economics, Elsevier, vol. 24(2), pages 277-297, March.
    3. Thursby, Jerry G. & Thursby, Marie C., 2000. "Interstate Cigarette Bootlegging: Extent, Revenue Losses, and Effects of Federal Intervention," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(1), pages 59-78, March.
    4. David Merriman, 2010. "The Micro-geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 61-84, May.
    5. Thursby, Jerry G. & Thursby, Marie C., 2000. "Interstate Cigarette Bootlegging: Extent, Revenue Losses, and Effects of Federal Intervention," National Tax Journal, National Tax Association, vol. 53(n. 1), pages 59-78, March.
    6. Galbraith, John W. & Kaiserman, Murray, 1997. "Taxation, smuggling and demand for cigarettes in Canada: Evidence from time-series data," Journal of Health Economics, Elsevier, vol. 16(3), pages 287-301, June.
    7. repec:aph:ajpbhl:10.2105/ajph.2005.079921_3 is not listed on IDEAS
    8. Gruber, Jonathan & Sen, Anindya & Stabile, Mark, 2003. "Estimating price elasticities when there is smuggling: the sensitivity of smoking to price in Canada," Journal of Health Economics, Elsevier, vol. 22(5), pages 821-842, September.
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    Cited by:

    1. James Alm, 2012. "Measuring, explaining, and controlling tax evasion: lessons from theory, experiments, and field studies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 54-77, February.
    2. Benjamin Hansen & Keaton Miller & Caroline Weber, 2017. "The Grass is Greener on the Other Side: How Extensive is the Interstate Trafficking of Recreational Marijuana?," NBER Working Papers 23762, National Bureau of Economic Research, Inc.
    3. Shu Wang & David Merriman & Frank J. Chaloupka, 2016. "Relative Tax Rates, Proximity and Cigarette Tax Noncompliance: Evidence from a National Sample of Littered Cigarette Packs," NBER Working Papers 22577, National Bureau of Economic Research, Inc.

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