Analyzing Cigarette Taxes
March 2, 1999
Less than three months after the tobacco companies raised their prices on cigarettes by 45 cents a pack to pay for their settlements with the states, President Clinton wants to slap an additional 55 cent levy on them.
How many other taxes are already involved in the price of cigarettes?
Here's a breakdown for a pack of Marlboros bought in New York City:
- Out of a $3.50 pack, the federal government takes 43 cents -- 19 cents in income tax and 24 cents as a sin tax.
- New York State and City tack on another 77 cents.
- Total tax take: $1.20.
- By comparison, the $883 million that states' lawyers will wind up with this year from tobacco settlements amounts to only 4 cents a pack.
Nationwide, another 41 cents goes to state governments as reimbursement of treatment for smoking-related illnesses.
For its part, Philip Morris pockets just 28 cents, after taxes, on that pack of Marlboros.
Source: Andy Newman, "Smoke One for the Taxman," New York Times Magazine, February 28, 1999.
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