A tax policy analyst said a proposed Delaware tax increase on cigarettes and alternative nicotine products would disproportionately affect lower-income residents.
“Almost all products that receive an excise tax are more heavily consumed by lower-income Americans,” Hoffer said in comments reported by WHYY. “So when we tax them, those taxes are regressive.”
“If you’re trying to improve the lives, especially of lower-income households, then regressive taxes, by their definition, make that really hard to accomplish,” he said. “Because you’re going to make a lot of those households worse off because you’re taxing them more heavily.”
Hoffer’s research focuses on excise taxation, consumer behavior, and the economic effects of state and federal tax policy.
His comments come as Delaware lawmakers consider House Bill 215, which would raise the state cigarette tax by $1.50 per pack and impose a 45% wholesale tax on alternative nicotine products under legislation currently before the General Assembly.
Smoking rates in Delaware are higher among lower-income residents, according to 2022 data from the Delaware Behavioral Risk Factor Survey, conducted by the Delaware Department of Health and Social Services. That survey found the highest smoking prevalence, 26%, occured among adults earning less than $25,000 annually.
Hoffer said that, over the past 60 years, cigarette use in the United States has declined each year. He said the continued decline has created challenges for states that rely on cigarette excise tax revenue, as governments become increasingly dependent on a shrinking tax base.
The Tax Foundation is a Washington, D.C.-based nonprofit tax policy research organization that analyzes federal, state, and international tax systems and publishes research on the economic effects of taxation and fiscal policy.
