Sin taxes have become a controversial talking point, with taxes on products such as cigarettes and alcohol attracting both praise and scorn from economists. Some say they’re useful for offsetting healthcare costs, while others claim that they’re a cost that primarily affects low-income individuals.
Whatever the case, the truth is that sin sells. From cigarettes to alcohol, learn about the United States’ three most sinful economies. Bloomberg recently studied several states to learn which earn the most of their tax revenue from sin. Given the popular perception of ‘sinful’ US destinations, the top three aren’t what you’d think.
New Hampshire
New Hampshire is known as a tax avoider’s paradise – a state with sin taxes that are some of the lowest in the country. Despite this, it ranks in first place in total revenue generated from sin as a proportion of its total state income.
With $225.4 million in sin-related earnings in 2012, New Hampshire is the United States’ most sinful state, relative to its budget. The state earned 10.2 percent of its total revenue through sin taxes, despite decreasing its cigarette tax during 2012.
Rhode Island
The Northeast seems to be the United States’ capital of sin taxes, with Rhode Island coming in a distant second place behind New Hampshire. 5.16 percent of state tax income in Rhode Island during 2012 was sourced from alcohol and cigarette taxes.
This allowed Rhode Island to post an excellent state budget for the years, despite its incredibly low tax rates. In fact, during the year of 2011, Rhode Island introduced a lower-than-normal top personal income tax rate of just 5.99 percent.
South Dakota
With no personal income tax and one of the lowest costs of living in the country, the people of South Dakota enjoy lean financial obligations all through the year. In 2012, this booming state earned 5 percent of its revenue from cigarette and alcohol taxes.
As well as its sin tax revenue, which reached $76 million in 2012, South Dakota has a thriving local gaming industry that brings in additional tax revenue for the state.
