Primary File

Cigarette Taxes in Ohio

Michael Jones
January 1, 2016
North America
Economics, Strategy & General Management
15 pages
externalities, taxes, health economics, elasticity, price elasticity
Student Price: 
$4.00 (€3.75)
Average rating: 

In 2015, Ohio’s Governor Kasich proposed a budget that would reduce the state’s income tax for both businesses and individual taxpayers. To offset this reduction in income tax collections, Governor Kasich proposed broadening and raising other taxes – including taxes on cigarettes. The increase in cigarette and tobacco taxes was a substantial component of the proposal by generating $1 billion in increased revenue for the State. Because of the importance of the cigarette excise tax in the budget proposal, questions remained about the estimates. Was Governor Kasich’s estimate realistic? Would consumers cross the border to purchase lower-taxed cigarettes? What would be the long-term health consequences for a reduction in smoking rates? How would the combination of these and other factors affect Ohio’s fiscal outlook?

Learning Outcomes: 
  1. Describe negative externalities
  2. Explain economic incidence, or tax burden, and elasticity
  3. Illustrate how individuals respond to incentives
  4. Classify economic goods
  5. Generalize the economic and health consequences of smoking
  6. Assess deadweight loss of taxation