The essay concludes with a discussion of existing empirical evidence relevant for understanding the potential effects of firearm and ammunition taxes. It then briefly describes some of the existing variation in firearm and ammunition taxes in the United States. It first discusses some of the conceptual considerations in the role of taxation as gun violence prevention policy. This essay synthesizes the limited research that has been conducted on firearm and ammunition taxes in the United States. There are also equity considerations: Uniform application of a commodity tax tends to be regressive, whereby lower-income individuals are disproportionately burdened by the tax (Hines, 2007 Allcott, Lockwood, and Taubinsky, 2019). Raising commodity taxes in various markets has been shown to reduce consumption and increase revenue (Chaloupka, Powell, and Warner, 2019), but uneven application of taxes across jurisdictions can result in tax avoidance (e.g., cross-border shopping) or tax evasion (e.g., interstate smuggling) behaviors that partially undermine the goals of the policy and may promote illicit manufacturing and trade (Joossens and Raw, 2012 Bate, Kallen, and Mathur, 2020). However, whether taxes change consumption varies and depends on the product being taxed (Wagenaar, Salois, and Komro, 2009), consumer characteristics (e.g., age, income, level of consumption) (Chaloupka, Yurekli, and Fong, 2012 Nelson, 2014), the visibility of the tax (i.e., tax salience) (Chetty, Looney, and Kroft, 2009 Finkelstein, 2009), and the availability of similar products not subject to the tax (Chaloupka, Powell, and Warner, 2019). A wide body of research has found that taxation can serve as an effective policy lever for reducing consumption and consumption-related harms. Taxation is also a revenue-generating mechanism, whereby revenues can be used to fund programs aligned with the purpose of the tax (e.g., earmarking tobacco tax revenues to support anti-tobacco education efforts), to cover costs related to the taxed activity (e.g., using gasoline tax revenues to maintain transportation infrastructure), to offset burdens generated by the tax (e.g., reducing taxes elsewhere), or to support other public aims (Marron and Morris, 2016). For example, excise taxes on alcohol, gasoline, and cigarettes are intended to discourage consumption of these goods and subsequently reduce external harms associated with their consumption (e.g., injury, pollution, health care costs) (Hines, 2007). Taxation is a policy lever frequently used as a means to influence social welfare and well-being. Given limited variation in state and local firearm and ammunition taxes in recent history, as well as the absence of consistent data on firearm and ammunition prices over time and across geographies, there is little empirical evidence to indicate how taxation would influence firearm-related outcomes, such as violent crime, suicide, self-defense, or sales of firearms. Although several states and localities have imposed special taxes on firearms and ammunition, these have typically been used to generate revenue, not as a strategy for reducing access to firearms or limiting gun crimes. It has rarely been used to manage risks associated with gun violence, however. Summary: Taxation has been a standard policy lever used to limit the harms associated with potentially dangerous goods (e.g., cigarettes, alcohol, and soda or sugary beverages).
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