Correlation Between Tax Hike and Price

[OlJawBone]

I am curious if anyone can explain why the proposed tax hike as prt of the reconciliation budget is 2100 percent, but i am seeing a number around 50 percent as far as price increase goes. Those numbers dont seem to line up.

 

[fireground_piper]

Ignore the percentage talk. It’s great for headlines.

The proposal is to go from $2.83 tax per pound to $49.56 per pound.

 

[hoosierpipeguy]

The numbers don't correlate because one is tax and one is price. There's not a 1:1 correlation. If the price is $1 and the tax is ten cents of that dollar, I could increase tax by 200% and the price would only go up 20% (20 cents).

 

[OlJawBone]

ok thanks for the clarification yall

 

[wyfbane]

One other thing to think about is what the states will do in the wake of this. If they raise their taxes similarly, then it will be that much more tax on the tobacco.

 

[Michigan_Bill]

Also the taxes in many states are based on the price of the tobacco including the federal excise tax. So the state tax collected will increase even if the rate stays the same. (In those states, of course.) Which increases the final amount paid even more.