Austan Goolsbee on Cigarette Taxes

If a state has higher cigarette taxes, stores within the state will sell fewer cigarettes, in part because residents of the state will be more likely to order the cigarettes from other, lower-tax or no-tax jurisdictions over the Internet, a new paper from the National Bureau of Economic research finds. An author of the article is Austan Goolsbee, who is a member of President Obama's Council of Economic Advisers. Professor Goolsbee may want to keep this insight in mind when considering things like a transaction tax on stock and options trades, which, unless implemented globally, might send traders to overseas markets and exchanges in the same way that a cigarette tax in New York sends buyers to other locales.