[Photo of Michael D. LaFaive]

Michael D. LaFaive

Senior Director of the Morey Fiscal Policy Initiative

Michael LaFaive is the senior director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy, where he has worked since 1995.

He is the author or co-author of hundreds of essays, commentaries and blog posts and 12 studies on fiscal policy topics as varied as local and state privatization efforts, corporate welfare, school finance, state budgeting and cigarette taxes.

Among his studies is the Mackinac Center for Public Policy’s largest, a nearly 200-page state budget analysis that recommended more than 200 ideas for trimming some $2 billion from the state budget without cutting Medicaid or School Aid funding. Many ideas first presented by LaFaive in 2003 have been adopted or adapted by lawmakers in Lansing.

He is also the originator of the Center’s annual school privatization survey, which routinely garners a 100 percent response rates from districts. There is no database of competitive contracting like it in the United States. In addition to this product, LaFaive authored in 2001 a 26-page, full-color edition of Michigan Privatization Report specifically dedicated to fixing Detroit. The ideas in that publication are more relevant today than when it was published.

LaFaive is perhaps best known, however, for his cutting-edge, scholarly work examining state “economic development” programs. His studies and frequent commentaries on this topic have garnered him a national, if not international reputation as a respected government development critic and were probably influential in the decision to kill the Michigan Economic Growth Authority, the state’s high-profile corporate welfare program. 

LaFaive has been interviewed more than 1,300 times by the media in the last ten years. He is typically interviewed more than 125 times a year by members of the press seeking comment on fiscal issues and remains a popular public speaker.

He has undergraduate and graduate degrees in economics from Central Michigan University.

LaFaive is married and resides in Midland, MI.

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Cigarette Taxes and Smuggling: A 2016 Update

Click here to view the PDF of the full study.
Introduction
Since 2008 the Mackinac Center for Public Policy — and more recently in conjunction with the Washington, D.C.-based Tax Foundation — has worked to estimate the degree to which cigarettes are smuggled into and out of American states. Our research, and that of other scholars too, suggests that smuggling is a rampant problem, particularly in states with high cigarette excise taxes.
Unintended and unforeseen consequences are a frequent problem in public policy. Few politicians realize when they vote for higher excise taxes that doing so may dramatically increase cigarette-related crime, such as smuggling. These crimes not only deprive local and state governments of tax revenues, they also tend to descend into violence, which produces all sorts of unnecessary damage. Policymakers should take these realities into consideration when contemplating how much to tax cigarettes.
This report analyzes the relationship between cigarette tax rates and cigarette smuggling rates. It relies on the same statistical model used in our previous studies, but uses the latest available data from 2014. New York State once again claims the highest smuggling rate in the nation. In fact, according to our analysis, New Yorkers consume more smuggled cigarettes than they do legally taxed ones. New York state has the highest excise tax rate on cigarettes in the country at $4.35 per pack and New York City adds another $1.50 tax. Arizona, Washington state, New Mexico and Minnesota round out the top five states for percentage of in-bound smuggling. Michigan ranks 12th, down two positions. … more

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