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Addicted To Cigarette (Sales) : Taxing The Native American Cigarette Trade, Jeffrey Hunt

Honors Theses

In order to close a budget deficit, New York State raised its cigarette tax in 2010 to $4.35 per pack. Included in this legislation was a removal of the exemption of cigarettes sold on Native American Reservations from the tax. This paper develops a model of cigarette demand that focuses on measuring cross-price elasticity of demand in order to ascertain the effect of state-level taxation on the sales of Native American cigarettes in New York. The model indicates that reservations will lose about 79% of their cigarette business, and that New York State will raise about $447 million dollars more …