More about Dr. James E. Prieger:

Prieger is an economist specializing in regulatory economics, industrial organization, economics of illicit markets, and applied econometrics. He is a Professor at the Pepperdine University School of Public Policy. He has held previous positions at the University of California, Davis and the Federal Communications Commission. He received his BA from Yale University and his PhD from the University of California, Berkeley.

Short Description:

Many well meaning public policies have unintended consequences, and taxes on “sin goods” like tobacco are no exception. California recently increased its excise tax on cigarettes by a large amount to discourage smoking, fund public health efforts, and raise revenue for the state. After the tax increase, tax receipts on sales decreased sharply, although evidence indicates that the incidence of smoking did not drop. How can this be? Through survey evidence collected by the authors, it appears that the tax increase raised tax avoiding and evading activity by smokers. About 44% of smokers engaged in some legal tax-avoiding behavior in the year after the tax increase, 15% evaded taxes through cross-border purchases, and 27% bought untaxed cigarettes in the state in the past month. The authors examine both the levels and determinants of a host of ways people sought to avoid or evade taxes and engage in black market activity.