A Lesson in Economics from the DC Cigarette Tax Hike

It’s as simple and intuitive as Newtonian physics, but it’s a principle that eludes most on the Left: raising taxes will produce a reaction in consumers. The new tax hike on cigarettes in Washington, DC is the latest case in point. In 2009, the city raised the tax on a pack from $2 to $2.50. At the time, city officials said revenue would go up. But guess what they forgot? Taxation does not happen in an economic vacuum. Once the taxes went up, smokers reacted by buying cigarettes in Maryland and Virginia. So, the city actually lost revenue. Apparently, it’s a lesson that’s going to have to be learned over and over again. For more, read the Daily Caller story.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s