Who pays sin taxes?

Freshly out in the NBER working papers.

Who pays sin taxes? You probably can make a pretty good guess:

We find that sin good purchases are highly concentrated with 10% of households paying more than 80% of taxes on alcohol and cigarettes. Total sin tax burdens are poorly explained by demographics (including income), but are well explained by eight household clusters defined by purchasing patterns. The two most taxed clusters comprise 8% of households, pay 68% of sin taxes, are older, less educated, and lower income. Taxes on sugary beverages broaden the tax base but add to the burdens of heavily taxed households. Efforts to increase sin taxes should consider the heavy burdens borne by few households.

Results will apply a fortiori in New Zealand. 

They note that, in New York, a 1.75L bottle of vodka might be as cheap as $11.99, including $7.97 in tax - all USD. If that bottle is 40% alcohol, that's 700mL of alcohol. 700mL of alcohol, in NZ, draws $39.64 in excise. And of course GST on top of excise. 

They note that House Democrats proposed doubling federal excise to $2.00 per pack, on top of state taxes with a median $1.78 burden per pack. New Zealand's excise is $1.045 - per cigarette. So $20.91 per pack.

The most heavily-taxed clusters in our sample are the Everything cluster, which comprises only 2.5% of the population yet pays 27% of all existing sin taxes (around $288 per adult per year); and Smokers, who comprise 5.5% of the population and pay 41% of all existing sin taxes (around $211 per adult per year). The groups are quite similar to one another, except that the Everything group purchases a large amount of alcoholic beverages (primarily beer and spirits for 9.4L of ethanol per adult per year or 10.2 standard drinks per week), while the Smokers purchase almost none. Both groups purchase more sugary beverages than any other cluster (157-170L per household per year or about 1.5L per person per week). Both groups also purchase about a half pack of cigarettes per day, but with substantial dispersion across households (the top 20% of households in these groups purchase at least one pack per day). Demographically, these two groups look similar to one another: they are older, lower-income, lower-education, less likely to have children or belong to racial or ethnic minority groups. They are most likely to be between the ages of 55-64 and least likely to be below age 35.21 Because many of these households are in the lowest-income bin (< $25,000 per year), their overall sin-tax burden as a share of income can be significant. It averages 2% of income for the Everything group and 1.5% of income for the Smokers group. The hypothetical SSB tax would add another 0.2%-0.3% of income on top of that.

The usual claim is that while excise is regressive, the health benefits are progressive. Of course, the ones paying a ton in taxes aren't the ones enjoying substantial health benefits.  

Thanks to Paul Walker for the pointer.