Morey Fiscal Policy Initiative

The Morey Fiscal Policy Initiative is dedicated to producing high quality research and timely analysis of fiscal policy issues in Michigan. Built on four policy pillars — budget, tax, economic development and privatization — the Initiative educates decision makers about the importance of making sound policy choices for a free society.

Latest Articles

Happy 50th Birthday Personal Income Tax

Now go away … more

School Retirement System Continues to Harm Members

Michigan's failed pension system is hurting school employees and taxpayers alike … more

Clean Michigan Initiative Not the Only Remediation Fund

Other sources for environmental clean-up eliminate need for further debt … more

Where the Money from Higher Transportation Taxes Goes

A bigger budget means more money for programs beyond road repair … more

Michigan Stagnates on Economic Freedom Index

After big recent gains, this state stuck in neutral … more

High Taxes on Cigarettes Increase Smuggling

New study looks at national rates … more

2016 Was Good For Michigan

Economy is growing and shows no signs of stopping … more

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

Plenty of Good Reasons to Oppose Business Subsidies

Giving taxpayer dollars to developers is ineffective … more

Subsidies Bad For Taxpayers

Bills considered in Lansing would have favored select businesses … more