Cigarettes

One of the big concerns in the US today is the wealth and income gap. It is often suggested that this problem be tackled by raising taxes on the rich but one area is never discussed and that is what are called sin taxes, like cigarettes and alcohol. Cigarettes cost about $10 per pack and $4 of that is taxes. For example, as of 2023, the federal excise tax on cigarettes is $1.01 per pack, with many states adding their own taxes that can range from $1 to over $4 per pack. Aug 21, 2022 In the US people with low incomes smoke at higher rate. In the US, cigarette smoking prevalence is higher among individuals with lower incomes compared to those with higher incomes. Specifically, in 2019, smoking prevalence was 21.4% among people with annual household income less than $35,000, 15.7% for those with $35,000-$74,999, 11.4% for those with $75,000-$99,999, and 7.1% for those with $100,000 or more. A family with an income of $35,000 per year will spend $3,600 on cigarettes. That is more than 10% and, in most cases, this is less than this family will save for retirement. The average production cost of a pack of cigarettes is 30 cents. Part of cost for production cigarettes was a fine leveled against cigarette companies and they covered the cost by raising prices. Cigarette companies agreed to pay substantial sums to states as part of the Master Settlement Agreement (MSA). This agreement, reached in 1998, obligated the tobacco industry to pay states an estimated $206 billion over 25 years.