Who Pays Sin Taxes? Understanding the Overlapping Burdens of Corrective Taxes

45 Pages Posted: 18 Oct 2021

See all articles by Christopher T. Conlon

Christopher T. Conlon

Leonard N. Stern School of Business - Department of Economics

Nirupama Rao

University of Michigan, Stephen M. Ross School of Business

Yinan Wang

New York University, Stern School of Business, Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 16, 2021

Abstract

We find that sin good purchases are highly concentrated with 10% of households paying more than 80% of taxes on alcohol and cigarettes. Total sin tax burdens are poorly explained by demographics (including income), but are well explained by eight household clusters defined by purchasing patterns. The two most taxed clusters com- prise 8% of households, pay 68% of sin taxes, are older, less educated, and lower income. Taxes on sugary beverages broaden the tax base but add to the burdens of heavily taxed households. Efforts to increase sin taxes should consider the heavy burdens borne by few households.

Keywords: Excise tax, sin tax, tax burden

JEL Classification: L66, H22, H23, H25

Suggested Citation

Conlon, Christopher T. and Rao, Nirupama and Wang, Yinan, Who Pays Sin Taxes? Understanding the Overlapping Burdens of Corrective Taxes (October 16, 2021). Available at SSRN: https://ssrn.com/abstract=3944008 or http://dx.doi.org/10.2139/ssrn.3944008

Christopher T. Conlon (Contact Author)

Leonard N. Stern School of Business - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

Nirupama Rao

University of Michigan, Stephen M. Ross School of Business ( email )

Ann Arbor, MI
United States

Yinan Wang

New York University, Stern School of Business, Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

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