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Suppose there is a bill to increase the tax on cigarettes by $1 per pack coupled with an income tax cut of $500. Suppose a person smokes an average of 500 packs of cigarettes per yearâand would thus face a tax increase of about $500 per year from the cigarette tax at the personâs current level of consumption. The income tax measure would increase the personâs after-tax income by $500. Would the combined measures be likely to have any eï¬ect on the personâs consumption of cigarettes? Why or why not?
Suppose there is a bill to increase the tax on cigarettes by $1 per pack coupled with an income tax cut of $500. Suppose a person smokes an average of 500 packs of cigarettes per yearâand would thus face a tax increase of about $500 per year from the cigarette tax at the personâs current level of consumption. The income tax measure would increase the personâs after-tax income by $500. Would the combined measures be likely to have any eï¬ect on the personâs consumption of cigarettes? Why or why not?
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Jarrod RobelLv2
8 Jul 2019
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