Cigarette Taxes Benefit the Poor the Most

Distribution of the 2009 tobacco tax increase by income quintile, benefits as a percentage of pre-tax income

Tobacco taxes are typically regressive – they take the largest percentage of income from the lowest-income households. But the picture changes significantly when the benefits of reduced mortality and morbidity are accounted for. Because the lower socioeconomic groups are more price-sensitive, when taxes raise cigarette prices, the poor get more health benefits than the rich. Those health benefits outweigh the burden of the tax and are the most beneficial for the lowest-income households.