As he did in last year’s budget, President Obama has called for a cap on retirement accounts, even though the personal savings rate in America hovers in the low single digits. Obama has added a provision to encourage...
- New York #1 in Cigarette Smuggling
New York #1 in Cigarette Smuggling
Over 60% of Empire State Smokes Being Sold Illegally
Washington, D.C., January 10, 2013—Over 60 percent of cigarettes sold in New York are smuggled in from lower tax states, the highest rate in the country, according to a new analysis by the Tax Foundation. Increasing excise taxes on cigarettes have created lucrative incentives for black market trafficking between states, with illegal sales on the rise nationwide. After New York, the next highest rates of smuggling are in Arizona, New Mexico, Washington, and Rhode Island.
“Public policies often have unintended consequences that outweigh their benefits,” says Tax Foundation economist Scott Drenkard. “Dramatic increases in state cigarette taxes have yielded additional revenue for priorities like public health, but have also fueled the rise of organized crime and law enforcement corruption.”
New York is the highest net importer of smuggled cigarettes, totaling 60.9 percent of the total cigarette market in the state. New York also has the highest state cigarette tax ($4.35 per pack), not counting the local New York City cigarette tax (an additional $1.50 per pack). Smuggling in New York has risen sharply since 2006 (+170 percent), as has the tax rate (+190 percent).
Most smuggling cases start with criminals procuring discounted packs from low-tax states to sell in high-tax states, but may also include counterfeit state tax stamps, counterfeit versions of legitimate brands, hijacked trucks, or bribed officials turning a blind eye to illegal shipments.
Data on illegal cigarette sales comes from the Mackinac Center for Public Policy, a Michigan think tank, which uses a statistical analysis of available data to estimate smuggling rates for each state. Their most recent report uses 2011 data and finds that smuggling rates generally increase in states after they adopt large cigarette tax increases.
The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Borean, the Tax Foundation’s communications associate, at 202-464-5120 or firstname.lastname@example.org.
Nebraska has many strengths: an enviable employment rate, a fiscally responsible state government, good transportation infrastructure, a diverse array of successful businesses, and a deserved...
During his 2013 State of the Union address, President Obama proposed a plan to implement a universal preschool program. Although the proposal has not been prominently featured in the news since the speech, Education Secretary Arne Duncan has...
Join the Tax Foundation's fight for sound tax policy Go
Tax Policy Blog
The official weblog of the Tax Foundation.
Tax By State
For information on your state, select it from the drop-down menu.
Ask a Tax Expert
Contact information for Tax Foundation policy staff Ask