U.S. cigarette sales in a (low-tax) state

Fifty-seven percent of cigarettes sold in the U.S. are smuggled from states with lower tobacco taxes than the state in which they are sold, according to a story by Mary Beth Griggs for the Smithsonian Magazine quoting a new study by the Tax Foundation.

This need not be surprising. In New York, smokers might pay $14.50 for a pack of cigarettes, while in Kentucky the retail price might be less than $5.

“As a result, smugglers buy huge numbers of cigarettes in states with lower taxes and resell them in states with higher taxes …,” wrote Griggs. “Whether or not state taxes on cigarettes are too high, the difference between states’ prices does create an incentive to smuggle them across state lines.

“Profits can be huge, and often that money goes towards more dangerous enterprises, like organized crime and drug rings.”

Griggs described the Tax Foundation as a conservative think tank that supported “pro-growth tax reform,” which, she added, usually meant lower taxes.

Griggs’ story, which touches on the international illicit trade and on the situation in Iran in particular, is at http://www.smithsonianmag.com/smart-news/cigarette-smuggling-united-states-and-iran-180950201/?no-ist.