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Excise Tax Research Program

Excise taxes are special taxes on specific goods or activities—such as gasoline, marijuana, soda, tobacco, alcohol, or gambling—rather than general tax bases such as income or consumption. Excise taxes are often included in the final price of products and services and are commonly levied either as a percentage of the value (ad valorem) or by quantity (specific).

Four Things to Know About Excise Taxes

  1. Excise taxes are often complicated to estimate and manage. They encourage consumers to look for substitutes both legal and illegal, which makes them difficult and expensive to enforce.
  2. Excise taxes lack transparency as the revenue streams from these narrow-based taxes are often appropriated for broad-based government programs such as education, transportation, or environmental services. Further, the consumer rarely knows what amount he or she is paying in excise and how much is the actual price of the good.
  3. Excise taxes often aim to encourage or discourage certain behaviors. The best example is the tobacco excise tax, which is supposed to deter people from smoking.
  4. The revenue streams are rarely stable because they rely on specific behaviors of a few companies or industries. For instance, tobacco excise revenue has been declining over the last decades; marijuana revenues have proved very difficult to predict; and sports betting revenues are much lower than forecasted. These should not be considered long-term streams of revenue for government programs.

Advocating for Principled Tax Policy

Through the Tax Foundation’s Excise Tax Research Program, we’ll work with various industries to produce research and analysis that shows policymakers that excise taxes are economically inefficient, difficult to administer, and place a huge burden on both consumers and retailers.

Our research will also offer principled solutions for policymakers to consider when implementing or restructuring excise taxes.

Our team will use a three-step process to guide policymakers:
1. Educate on the need for a thoughtful approach when applying excise taxes on products
2. Maintain a repository of information on actions by the federal and state governments
3. Work alongside Congress, states, and localities individually to find solutions

How Can I Get Involved?

If you’re interested in working more closely with Tax Foundation experts to:

Then click the link below to sign up for our Excise Tax Research Program.

Click Here to Register Today

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