Increase tax on cigarettes

Assignment Help Business Economics

Reference no: EM13859477

Suppose there is a bill to increase tax on cigarettes by $1 per pack coupled with an income tax cut of $500. Suppose a person smokes an average of 500 packs of cigarettes per year--- and would thus face a tax increase of about $500 per year from the cigarette tax at the persons current level of consumption. The income tax measure would increase the persons after tax income by $500. Would the combined measures likely to have any effect on the persons consumption of cigarettes? why or why not?

Reference no: EM13859477

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