TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, June 7, 2018

Tax Evasion And Illicit Cigarettes In California

James E. Prieger (Pepperdine) & Jonathan Kulick (NYU), Tax Evasion and Illicit Cigarettes in California: Part I – Survey Evidence on Current Behavior:

Data from a novel online survey of 5,000 English-speaking adult cigarette smokers in California in advance of a recent increase in the state’s cigarette excise tax indicate that slightly more than one-quarter of that population engaged in some legal tax-avoiding behavior in the previous month, while nearly one-fifth illegally evaded taxes. (The two behaviors overlapped substantially.) Candor-inducing indirect questioning via the item count technique substantially increased those figures. Smokers who roll their own cigarettes, e-cigarette users, younger smokers, and those with more income and education are all more likely to engage in at least some of the suspect market behaviors examined. There is a much lower incidence of counterfeit product and sales of single cigarettes.

This suggests that the tax increase may lead to significant amounts of adaptive behavior by smokers that will tend to reduce the intended health benefits of that policy change.

Scholarship, Tax | Permalink


"About a third of cigarettes in California are estimated to be from out-of-state (and thus tax-avoiding) sources."

So, bootleggers avoid California's high taxes, but some people want to believe that corporations don't think likewise to escape California's high taxes.

The paper is a lot of work for such an obvious conclusion. They would see the same results from a history of Georgia bootleggers, New York cigarette taxes, and taxes on soft drinks, as demanded by those who know best for our own good

Posted by: Woody | Jun 7, 2018 11:22:36 AM

Could be worse. The cops shoked a gentle giant to death on Statten Island for similar offenses.

Posted by: MM | Jun 7, 2018 7:06:26 PM