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Cigarette Tax Will Affect Low-Income Americans Most

Cigarette Tax Will Affect Low-Income Americans Most

PRINCETON, NJ -- The 62-cent increase in federal cigarette taxes going into effect Wednesday is nearly three times as likely to affect low-income Americans as it is to affect high-income Americans. That's because 34% of the lowest-income Americans smoke, compared with only 13% of those earning $90,000 or more per year.

The rate of adult smoking in the United States is, in fact, directly related to household income, dropping in linear fashion as income rises. Overall, 21% of American adults smoke.

These findings are based on more than 350,000 interviews with U.S. adults aged 18 and older in 2008, conducted as part of the Gallup-Healthways Well-Being Index.

A different way to look at this smoking-by-income data is that slightly more than half of today's smokers (53%) earn less than $36,000 per year -- making cigarette taxes highly regressive. Another 35% of smokers earn between $36,000 and $89,999 per year, while only 12% of all smokers make at least $90,000 annually.


Will the Financial Burden Lead to Cessation?

While the explicit purpose of the latest federal cigarette tax increase is to fund reauthorization and expansion of the federal Children's Health Insurance Program, anti-smoking advocates hope it will encourage many smokers to give up cigarettes. In addition to the public health benefits, this would ultimately save smokers money by sparing them the entire expense of cigarettes -- currently averaging about $5 per pack, though this varies widely across the country.

As Dr. Timothy Gardner, president of the American Heart Association, was recently quoted as saying, "Every time that the tax on tobacco goes up, the use of cigarettes goes down."

How much will the new 62-cent federal surtax on cigarettes add to the financial pressure that lower-income smokers already feel? It's unclear; however, more than 6 in 10 smokers at the lowest income level tell Gallup they worried about money "yesterday." The rate of financial worry remains fairly high through those making $59,999 per year, but then falls to just over a third among those making $60,000 or more.

In other words, low-income smokers are already highly anxious about money; it's conceivable that the additional cost for a pack of cigarettes could push them into quitting.


Still, for most smokers, the annual cost of this tax increase isn't enormous. According to Gallup's 2008 Consumption Survey, most smokers (61%) smoke less than a pack of cigarettes per day. Another 30% smoke about one pack, while only 6% admit to smoking more than a pack a day.

On this basis, for 9 in 10 smokers, the total added expense of the new cigarette tax will be no more than 62 cents per day, or about $225 per year. Heavy smokers will find the tax increase more onerous, but they may also be the most resistant to quitting at any price.

Other Smoking Patterns

Beyond the income distinctions, smoking is more prevalent among men than among women (23% vs. 19%), and among younger and middle-aged adults than among seniors.

The accompanying graph shows the percentage of smokers by age for 18- to 29-year-olds and then for subsequent 10-year age groups, depicting a clear decline in the rate of smoking starting at about age 60.


Smoking varies only slightly by region of the country, with the highest rates seen in the East Central/Great Lakes states, as well as in the Southeast. The lowest rates are seen in the Pacific and Rocky Mountain states, followed by New England.


In line with the distinctions by income, smoking is most common among those with little to no college education, and is far less prevalent among those with an undergraduate or graduate degree.


Bottom Line

From the Gallup-Healthways smoking data reviewed here, it's clear the new 62-cent federal tax increase on a pack of cigarettes will have a disproportionately heavy financial impact on lower-income Americans. However, lower-income Americans are also highly worried about money right now, suggesting some might quit smoking over the rising cost. That would result in both financial and health benefits for those who quit.

Although President Obama signed the new cigarette tax increase into law in February, many Americans are probably becoming aware of it only this week, just as the tax goes into effect. Even if the new tax does come as a surprise, the general public may not be highly upset by it. Most Americans don't smoke, and the last time Gallup asked Americans explicitly about cigarette taxes, in 2005, only a third thought they were too high. Another third said they were about right, while 25% said they were too low. At the same time, about half said cigarette taxes should be raised to help discourage smoking.

Survey Methods

Results are based on telephone interviews with 354,800 national adults, aged 18 and older, conducted between Jan. 2, 2008 and Dec. 29, 2008, as part of the Gallup-Healthways Well-Being Index. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is less than ±1 percentage point.

Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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