How Sin Taxes Reshape Consumer Behavior and State Budgets

In Episode 106 of The Tax Policy Podcast, Lucas and Luna explore how sin taxes on alcohol, tobacco, and sugar-sweetened beverages are reshaping consumer behavior and state budgets in 2026. They focus on the recent 2025 soda tax expansion in Philadelphia, which raised revenue by $47 million in its first year while reducing sugary drink consumption by 22 percent. The hosts discuss how sin taxes differ from broad-based consumption taxes, the regressivity debate, and what economists call the 'flypaper effect' when earmarking tax revenue for public health programs. They also examine how sin tax rates have changed since 2020, with the average state cigarette tax now at $1.91 per pack, up from $1.71 in 2020. The episode touches on the substitution effect, cross-border shopping, and the tension between public health goals and revenue maximization. A light donation segment invites listener support at buy me a coffee dot com slash fexingo. #SinTax #ExciseTax #SodaTax #TobaccoTax #AlcoholTax #PublicHealth #StateBudget #Philadelphia #SugarTax #ConsumerBehavior #Regressivity #FlypaperEffect #ExciseTax2026 #CrossBorderShopping #TaxPolicy #Economics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo