The Micro-Geography of Tax Avoidance: Evidence from Littered Cigarette Packs in Chicago

By David Merriman. 2010

156 citations recorded by the source corpus.

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)

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/0b9a85ddedfe4c6d43081e93044025ab79820f9a

Citations in the corpus

• The Impact of Soda Taxes: Pass-Through, Tax Avoidance, and Nutritional Effects (2020, unknown): “…literature on various other sin taxes, such as taxes on alcohol (e.g., Conlon and Rao 2015, 2020; Miravete, Seim, and Thurk 2017, 2018), cigarettes (e.g., Harding, Leibtag, and Lovenheim 2012; Lovenheim 2008; Merriman 2010), and cannabis (e.g., Hollenbeck and Uetake 2018; Jacobi and Sovinsky 2016).”