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Articles by Todd Nesbit
Illicit smokes: 17% of cigarettes consumed in Michigan during 2024 were smuggled
| Font size: 75% 100% 125% 150% Tax policy can have unexpected consequences. To take one example, high excise taxes on cigarettes have fueled small- and large-scale , theft, counterfeit products and against both civilians and police. Policymakers should take note: Consumers do not eagerly await to pay more in ever-higher taxes. They change their behavior, often in ways that undermine the goals tax advocates hope to achieve.
Cigarette smuggling increase on the docket in Washington State
| Font size: 75% 100% 125% 150% Washington is on the verge of making a mistake with proposed legislation that would raise Washington’s cigarette excise tax by $2 per pack to more than $5. This would result in a 23-percentage-point increase in cigarette tax evasion and avoidance, an unintended consequence the state should avoid. We recently published a study that measured the degree to which cigarettes are trafficked among the 48 contiguous states, as well as to Canada and from Mexico.
Tax hikes and smuggling: Will Michigan tempt scofflaws?
Gov. Gretchen Whitmer proposed a new budget Feb. 18 with $900 million in tax increases built in, including a 50% increase in Michigan’s excise tax on cigarettes. Her proposal, if adopted, would raise the tax from $2 per pack to $3 per pack. This tax hike, and others on nicotine users, would also raise Michiganders’ rate of tax evasion and avoidance, or what we call, “smuggling.” Smuggling is a side effect of imposing high taxes on popular products.
Laws have unintended consequences
This article originally appeared in The Detroit News February 3, 2026. Football fans have enjoyed great games during the recent playoff season, at both the college and professional levels. Turn on any of those games and you were bombarded with prescription drug commercials. Have you noticed that pharmaceuticals come with side effects that sound worse than the underlying malady?
Indiana chokes with new cigarette taxes
This article orginally appeared in The Washington Post January 29, 2026. Public officials in Indiana drew attention and applause last month when they claimed that cigarette use had declined by 40 percent. They credited a $2 per-pack tax hike that took effect in July. We wish it were true, but state officials made the common error of assuming a decline in legal cigarette sales meant fewer people were smoking. A closer look at the data tells a different story.
What Indiana got wrong about cigarette taxes
What Indiana got wrong about cigarette taxes (washingtonpost.com) What Indiana got wrong about cigarette taxes By Michael LaFaive; Todd Nesbit 2026012811310300 Public officials in Indiana drew attention and applause last month when they claimed that cigarette use had declined by 40 percent. They credited a $2 per-pack tax hike that took effect in July. We wish it were true, but state officials made the common error of assuming a decline in legal cigarette sales meant fewer people were smoking.
High-tax California is the nation’s cigarette-smuggling capital
This article originally appeared in the Wall Street Journal August 1, 2025. California isn’t only the No. 1 state for illegal immigrants. It’s also the top state for illegal cigarettes. The reason is clear: heavy-handed government. The Golden State has banned some popular cigarettes while jacking up taxes on the smokes that remain. The result has been a rise in crime, lost revenue and yet another lesson in unintended—yet entirely predictable—consequences.
Indiana's 201% cigarette tax hike will fuel smuggling, not just revenue
| Font size: 75% 100% 125% 150% This article originally appeared in IndyStar on June 27, 2025. Indiana’s 201% hike in its cigarette excise tax, which takes July 1, will reshape consumer behavior, and not necessarily in the way lawmakers expect. While the intent is to boost revenue, the dramatic tax increase from 99.5 cents per pack to nearly $3 will light up at least one major unintended consequence: cigarette smuggling.
Opinion | High-Tax California Is the Nation’s Cigarette-Smuggling Capital
Your browser does not support HTML5 video. California isn’t only the No. 1 state for illegal immigrants. It’s also the top state for illegal cigarettes. The reason is clear: heavy-handed government. The Golden State has banned some popular cigarettes while jacking up taxes on the smokes that remain. The result has been a rise in crime, lost revenue and yet another lesson in unintended—yet entirely predictable—consequences.
California is America’s cigarette smuggling king
Only 16% of cigarettes consumed in Michigan came about through tax evasion in 2023. This is the lowest rate we have recorded since we first published state-by-state cigarette smuggling rates in 2008. Seventeen states have higher inbound smuggling rates than Michigan. We expect Michigan’s inbound smuggling rate to drop again in the coming years due to a large tax increase in Indiana. Other states face greater smuggling due to their higher taxes and bans.
Indiana's 201% cigarette tax hike will fuel smuggling, not just revenue | Opinion
Indiana’s 201% hike in its cigarette excise tax, which takes July 1, will reshape consumer behavior, and not necessarily in the way lawmakers expect. While the intent is to boost revenue, the dramatic tax increase from 99.5 cents per pack to nearly $3 will light up at least one major unintended consequence: cigarette smuggling. Some smokers will quit, but many others will engage in tax avoidance and evasion — and possibly other illegal behavior.
Will Washington State become king of smuggled smokes?
| Font size: 75% 100% 125% 150% Politicians in the state of Washington are proposing a 66% increase in the cigarette excise tax as well as an outright ban on menthol cigarettes and other flavored nicotine products. More than a third of cigarettes currently consumed in Washington have been smuggled into the state. Imposing stricter, more costly laws is likely to increase that alarming figure. We have studied cigarette excise tax evasion and avoidance, or what we call “smuggling,” for decades.
Where high-earning households are moving: It ain’t Michigan
There’s an adage that whatever you tax more, you get less of. Michigan is learning this lesson the hard way as strong income earners flee the state. The financial information website SmartAsset last week published the results of its 2024 study, “Where High-Earning Households Are Moving.” Spoiler alert: they’re not moving to Michigan. Based on IRS data, high-income households are leaving Michigan at the 12th highest rate in the nation.
Smuggled smokes will maul Maryland
Maryland Governor Wes Moore recently signed a budget agreement that would raise taxes on cigarettes and other tobacco and vaping products, the cigarette tax will increase by $1.25, to $5.00 per pack. Lawmakers should rethink their plan. We estimate that nearly one-third of all cigarettes consumed in Maryland in 2022 came to market through tax avoidance and evasion, or what we call smuggling.
Proposed tax hike and flavor prohibition recipe for lawlessness
| Font size: 75% 100% 125% 150% Each year since 2008, the Mackinac Center has estimated the degree to which cigarettes are smuggled in and out of the Great Lake State, as well as other states. Our latest estimate is that 17.1% of all cigarettes consumed in Michigan in 2022 were a function of tax evasion and avoidance. We expect that figure to rocket to as high as 40.7% if recently introduced legislation to raise cigarette excise taxes and ban flavored nicotine products is enacted.
Political systems, regime memory, and economic freedom
EFW Economic Freedom of the World GDP Gross Domestic Product OLS Ordinary Least Squares USA United States of America USSR Union of Soviet Socialist Republics 1 INTRODUCTION After the fall of the Berlin Wall and the collapse of the Soviet Union, many hoped that the Eastern Bloc countries and the newly independent former Soviet Republics would have the opportunity to pursue economic and political institutions that would favor economic freedom and prosperity.
Has the first tax hike of 2024 just dropped?
Senate Bill 648 was introduced November 9 with little fanfare, but it deserves a lot of attention for the size and scope of the revenue grabs and unintended consequences it will cause. The proposal would raise excise taxes on cigarettes by 75% (from $2.00 per pack to $3.50), increase the tax on other tobacco products from 32% to 57% of the respective wholesale price and impose a new tax on electronic smoking products.
At least we’re Not New York
Last week one of these authors (LaFaive) had the pleasure of working with a network of colleagues on an important economic measure published annually by the Fraser Institute. It is known as the “Economic Freedom of North America” index and it is designed to objectively measure economic freedom in the 50 United States, Mexican states and Canadian provinces by the degree to which each is more or less economically free.
Canary in a cigarette-smuggling coal mine
| Font size: 75% 100% 125% 150% This article appeared July 9 2023 at American Institute for Economic Research. Since 2008 we have published (with the Washington, D.C.-based Tax Foundation) estimates on the degree to which cigarettes are smuggled, by state, including those exported to Canada or imported from Mexico. New rules to ban menthol cigarettes being considered by the Food and Drug Administration may dramatically hike cigarette smuggling.
Film subsidies encourage youth smoking and cancer
| Font size: 75% 100% 125% 150% Lansing politicians want to bring film production subsidies back to Michigan. House Bills 4907 and 4908, which may be voted on during the lame-duck session, would offer a transferable tax credit for up to 30% of production expenditures and could cost taxpayers $2.1 billion over the next 10 years. Michigan should give two thumbs down to this legislation.
Cigarette taxes turn New York into smuggling empire
| Font size: 75% 100% 125% 150% By Todd Nesbit, Ph.D. and Michael D. LaFaive This article originally appeared in the Wall Street Journal March 10. New York has created a cigarette-smuggling empire, and the worst is yet to come. It’s the unavoidable consequence of the state’s decadeslong history of raising the cigarette tax, which Gov. Kathy Hochul wants to continue with an additional levy of $1 a pack. She also wants to ban flavored cigarettes.
Opinion | Taxes Have Made New York Into an Empire of Cigarette Smuggling
New York has created a cigarette-smuggling empire, and the worst is yet to come. It’s the unavoidable consequence of the state’s decadeslong history of raising the cigarette tax, which Gov. Kathy Hochul wants to continue with an additional levy of $1 a pack. She also wants to ban flavored cigarettes. This will only lead to more lawbreaking and less tax revenue, defeating its purpose.
Michigan voters reject repeal of right-to-work law
Fewer than half of state voters want lawmakers to repeal Michigan’s right-to-work law, according to two recent polls. One poll was commissioned by the free-market Mackinac Center for Public Policy, and the other by the liberal activist group Progress Michigan. The poll from Progress Michigan, done by Democratic polling firm Public Policy Polling, asked 763 Michigan voters whether they support, oppose or aren’t sure about a series of policy issues the Legislature could tackle in 2023.
Tennessee adds right-to-work to state constitution
Tennessee sent a clear message around the country yesterday: Worker freedom is a constitutional right that must be protected. Voters approved Amendment 1 by a two to one margin, elevating right-to-work from law to a constitutionally protected right in Tennessee. The amendment swept all 95 counties in the Volunteer State.
Ohio jobs head for right-to-work states
This article originally appeared at Real Clear Policy September 2 2022. The first sentence has been modified. We feel compelled to alert policymakers of a robust movement of manufacturing and other jobs and opportunities from Ohio to Michigan and Indiana, our home states. We have examined the employment impact of state right-to-work laws at the county level. Right-to-work laws simply say that no worker need be compelled to join or financially support a union.
Indiana works with Right-to-Work
Just over 10 years ago, the Hoosier State adopted a powerful economic development tool in the form of a right-to-work law. This law simply states that workers need not be required to financially support or join a union to keep their jobs. Scholarship generally shows right-to-work laws are beneficial to workers and to job providers in states that adopt them. Our new research shows this as well.
Ohio Jobs Head for Right-to-Work States
As workers across the country celebrate the long Labor Day weekend, we feel compelled to alert policymakers of a robust movement of manufacturing and other jobs and opportunities from Ohio to Michigan and Indiana, our home states. We have examined the employment impact of state right-to-work laws at the county level. Right-to-work laws simply say that no worker need be compelled to join or financially support a union.
Ohio Jobs Head for Right-to-Work States
As workers across the country look forward to a long Labor Day weekend, we feel compelled to alert policymakers of a robust movement of manufacturing and other jobs and opportunities from Ohio to Michigan and Indiana, our home states. We have examined the employment impact of state right-to-work laws at the county level. Right-to-work laws simply say that no worker need be compelled to join or financially support a union.
Ohio Jobs Head for Right-to-Work States
As workers across the country look forward to a long Labor Day weekend, we feel compelled to alert policymakers of a robust movement of manufacturing and other jobs and opportunities from Ohio to Michigan and Indiana, our home states. We have examined the employment impact of state right-to-work laws at the county level. Right-to-work laws simply say that no worker need be compelled to join or financially support a union.
Smuggled smokes: More potential profit for organized crime Original
The Food and Drug Administration’s Center for Tobacco Products is holding a “virtual listening session” for those who wish to weigh in on a proposed rule that would effectively prohibit the sale of menthol-flavored cigarettes nationwide. The proposed tobacco product standard would increase the illicit cigarette trade. The United States already has a cigarette smuggling problem. Banning 30 percent of the current cigarette marketplace would just fan the flames of illegal markets.
Right-to-work protections do work
Ten years ago, our home states of Michigan and Indiana adopted right-to-work statutes. These laws state that no worker as a condition of employment needs to join nor financially support a union. In addition to providing workers greater freedom, scholarly research suggested that right-to-work laws are powerful economic development tools. Our new study lends credence to those conclusions.
Opinion | Welcome to Indiana, a Right-to-Work State
Angela Phillips grew up in Ohio and has run a family-owned manufacturing business there since 2009. In 2018 she was looking to expand the firm and, given her years of experience with labor unions, believed it made sense to grow in a right-to-work state. So in 2020 she opened a Phillips Tube Group plant right across the border in Richmond, Ind., which now employs more than 25 people.
Land Use Regulation and Housing Affordability
Every city in the United States has implemented land use regulations that limit the amount of housing that can be built within city borders and raise the cost of new housing construction. These rules are framed as tools for reducing the negative externalities of development, such as noise that carries across property lines or shadows that buildings cast on their neighbors.
Governments Light Up Cigarette Smuggling
Commentary A tax hike will make cigarette smuggling even more lucrative By Michael D. LaFaive and Todd Nesbit, Ph.D. | August 5, 2021 Tax evasion and avoidance may be as old as taxation. A Sumerian proverb dating back at least 3,900 years said: “You can have a lord, you can have a king, but the man to fear is the tax collector.” That was no joke.
Minnesota poised to become hotbed for smuggled smokes
Columns From the column: “In mid-2018, the city of Duluth clamped down on the sale of flavored products, such as menthol cigarettes, limiting their sale to adult-only smoke shops. The consultancy firm Management Science Associates reported in February 2019 that menthol volumes all but vanished in Duluth’s restricted stores but went up substantially in stores just outside Duluth.
Will this year smoke out cigarette tax hikes?
© iStock Cigarette smoking is at an all-time low This month and the last brought arrests and prison sentences for smuggling cigarettes and other contraband into correctional facilities in and , respectively. Lawmakers considering hiking cigarette taxes ought to note: Higher taxes encourage more illegal smuggling into a state, and if law enforcement can't keep illicit smokes out of prisons, there is little hope of keeping smuggled ones out of the hands of the public.
Opinion | A cigarette tax hike in Maryland would increase smuggling
Michael LaFaive is senior director of fiscal policy for the Mackinac Center for Public Policy, a research and educational institute based in Michigan. Todd Nesbit is an assistant professor of economics at Ball State University. Both are contributors to the new Mercatus Center book “For Your Own Good: Taxes, Paternalism and Fiscal Discrimination in the 21st Century.” As the Maryland General Assembly’s 2021 session gets underway, lawmakers will consider a tax hike bill previously vetoed by Gov.
Defund Corporate Welfare Agency for Better Public Health
Commentary Higher taxes won't be as effective at eliminating smoking habits Editor's Note: This article was first published in The Detroit News on July 1, 2020. In 1998, attorneys general from most American states settled lawsuits against large tobacco companies, having first asserted that governments needed to recoup Medicaid-related costs associated with the sale of tobacco products.
Opinion: Stop tobacco settlement funds from going up in smoke
OPINION Michael LaFaive and Todd Nesbit Published 10:50 p.m. ET July 1, 2020 In 1998, attorneys general from most American states settled lawsuits against large tobacco companies, having first asserted that governments needed to recoup Medicaid-related costs associated with the sale of tobacco products. The tobacco “Master Settlement Agreement” that resulted from the lawsuits came with a payout of over $200 billion to states during the first 25 years of the MSA alone.
Automobile Safety Regulation and the Incentive to Drive Recklessly: Evidence from NASCAR
Author Listed: Russell S. Sobel () (Department of Economics, West Virginia University) Todd M. Nesbit () (Sam and Irene Black School of Business, Penn State Erie, The Behrend College) Abstract When safety regulation makes automobiles safer, drivers may drive more recklessly, partially or completely offsetting effects on the overall level of safety. Evidence of these offsetting effects has been hard to find, however, primarily because of the aggregate nature of accident data.
Flavor prohibitions will leave bad taste in states' mouths
In recent months, several states have considered bans on flavored cigarettes and vaping products. Most of the serious proposals are in the Northeast, though they’ve appeared in Virginia and Michigan, too. Outright prohibitions — especially on popular menthol cigarettes — probably will do more harm than good, as will unusually high excise taxes.
High cigarette taxes have led to thriving black market across America
State and even federal lawmakers have over the years turned to higher taxes on cigarettes to raise revenue and combat the “sin” of smoking. There are, however, unintended consequences to such policies. These include tax evasion and avoidance (collectively referred to as smuggling) and other activities, often illegal. This is why getting a handle on the degree to which smuggling occurs is so important.
Mich. Tax Bureaucrats Burden Small Business
Editor's note: This article originally appeared in The Detroit News on January 29, 2019. Last June the Supreme Court overturned years of legal precedent and effectively granted states greater taxing powers over transactions that involve out-of-state retailers. The Supreme Court’s decision in this case, known as South Dakota v. Wayfair, makes it easier for Michigan’s Treasury to raise revenue — an estimated $200 million-plus per year, according to published estimates.
Sky-high cigarette taxes are the new Prohibition: The consequences are eerily similar
During Prohibition, stealing meant robbing fellow criminals rather than retailers, and that happens with illicit cigarettes today. In 2015 one Richmond, Virginia headline read, "Robbery Victim Arrested, Charged in Cigarette Trafficking." The victim ran illegal smokes out of his business and was apparently robbed by an employee. That same article read, "New York authorities complain traffickers there have been robbing each other of cash and valuables, readily disposable cigarettes."
An empire of smuggled smokes | Crain's New York Business
New York has ostensibly made the health of its people and its treasuries a priority by maintaining high cigarette taxes, but these taxes come with a cost. The state’s high cigarette taxes have led to rampant tax evasion and avoidance and other ugly, unintended consequences. Since 2008, we have assessed the degree to which cigarettes are smuggled between states.
Do cigarette tax hikes make people kick the habit? Not necessarily.
People change their behavior based on incentives and higher taxes create a strong motivation to find ways to avoid paying them. Just look at cigarettes. While the goal of many who wish to raise taxes on cigarettes is noble — improving public health — new research confirms what decades of previous studies have shown: much of the decline in legal paid sales of cigarettes is due not to people kicking the habit, but to an increase in smuggling.
Smuggling to rise with tobacco tax hike - TheMountainMail.com: Opinion
An initiative that may appear on Colorado’s November’s ballot would, if adopted, nearly triple the state’s current cigarette excise tax. This, we believe the evidence shows, will usher in a wave of cigarette smuggling and other undesirable consequences. Voters should think twice before adopting this tax increase. Research shows high excise taxes invite scofflaws to traffic in illicit cigarettes, encourage corruption among public officials and trigger violence against people, property and police.
Guest opinion: Would tax hike boost cigarette smuggling?
An initiative that may appear on Colorado’s November’s ballot would, if adopted, nearly triple the state’s current cigarette excise tax. This, we believe the evidence shows, will usher in a wave of cigarette smuggling and other undesirable consequences. Voters should think twice before adopting this tax increase. Research shows high excise taxes invite scofflaws to traffic in illicit cigarettes, encourage corruption among public officials and trigger violence against people, property and police.
LaFaive and Nesbit: Colorado smuggling to rise along with tobacco tax hike
Todd Nesbit, PhD, is a senior lecturer at The Ohio State University and adjunct scholar with the Center.
Elevating pharmacists’ scope of practice through a health-system clinical privileging process
Summary Health-system pharmacists or pharmacy leaders must gain a thorough understanding of the credentialing and privileging process as they broaden their scope of practice. Clinical privileging affords an expanded scope of practice that is recognized at the institutional level and formally elevates the pharmacist to that of a nonphysician provider.
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