Cigarette Taxes Introduction Simple Review Term Paper

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.." (Fleenor, nd) it is related that it did not take long for this to spread into other U.S. states with trucks all around the United States being hijacked and robbed of their cigarette cargo. The following tables lists the state excise tax rates on cigarettes for January 1, 2007.

State Excise Tax Rates on Cigarettes (January 1, 2007

TAX RATE per pack)

RANK

STATE

TAX RATE

CENT PER PACK

Alabama (1)

Nebraska

Alaska (3)

Nevada

Arizona

New Hampshire

Arkansas

New Jersey

California

New Mexico

Colorado

New York (1)

Connecticut

North Carolina

Delaware

North Dakota

Florida

Ohio

Georgia

Oklahoma

Hawaii (3)

Oregon

Idaho

Pennsylvania

Illinois (1)

Rhode Island

Indiana

South Carolina

Iowa

South Dakota

Kansas

Tennessee (1) (2)

Kentucky (2)

Texas

Louisiana

Utah

Maine

Vermont

Maryland

Virginia (1)

Massachusetts

Washington

Michigan

West Virginia

Minnesota (4)

Wisconsin

Mississippi

Wyoming

Missouri (1)

Dist. Of Columbia

Montana

U.S. Median

Source: (http://www.taxadmin.org/FTA/rate/cigarett.html)

III. CIGARETTE TAX: A REGRESSIVE FORM of REVENUE

Babington (2007) in the report entitled: "Raising Cigarette Tax to Fund Kids Health Bill Would Hit Poor the Hardest" states that: "Congressional Democrats have chosen an unlikely source to pay for the bulk of their proposed $35 billion increase in children's health coverage: people with relatively little money and education." (Babington, 2007) This proposed program expansion would be funded with a 156% increase in the federal tax on cigarette purchases. Since more low-income individuals smoke than do the more affluent in the United States this would result in a "regressive form of revenue." (Babington, 2007) Kingston, a representative from the State of Georgia was noted as having stated that in order "to get enough money to pay for this, it would require 22 million new smokers.

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" (Babington, 2007) This was recently vetoed by President Bush. As New York City discovered "highly sophisticated bootlegging operations are often run by organized crime." (Fleenor, 2003) in fact, "the history of cigarette smuggling in the United Stats closely parallels the experience of New York City." (Fleenor, 2003) in the decades of the 1940's and 1950's taxes on cigarette purchases were moderate across the United States and bootlegging of cigarettes was on a very small scale. However, in the 1960's "as states responded to growing concerns about smoking and health by substantially raising tax rates. During 1965 alone, 22 states hiked their cigarettes taxes averaging 13 cents per pack - nearly three times the level two decades earlier, on constant dollar terms." (Fleenor, 2003) These high levels of tax are stated to have set off large amounts of bootlegging in cigarettes and by the mid-1970's "ACIR estimated that 14 states, containing about half the U.S. population, had serious problems with cigarette bootlegging." (Fleenor, 2003) the problems are related to be of such a severe and ongoing nature in New York City, that efforts on the part of law enforcement to deal with bootlegging of cigarettes have been a total failure and totally ineffective.

SUMMARY and CONCLUSION

Not only would the kids health care bill have been a regressive form of revenue, the fact is, that anytime excess taxes are imposed on any one product the situation is created for profit to be realized through bootlegging of that product. Just as evidenced in the experience of New York City, there is always some type of public response to heavy tax imposition on products and goods which have the potential to create a.....

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