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Jared Smith Explains the Unintended Consequences of Sin Taxes

Jared Smith, associate professor of finance, and co-authors examine if taxpayers targeted by sin taxes are more likely to defraud others in unrelated transactions in a recent paper. Sin taxes are a common name for taxes on products such as sugar and cigarettes that discourage unhealthy or undesirable behaviors.

“First, tax increases can reduce the buying power of targeted taxpayers,” said Smith and co-authors. “This reduction in purchasing power could increase the value of additional income to affected taxpayers and, accordingly, their incentive to commit fraud.”

Read more on Bloomberg Tax