The Dirty Dozen: 12 States That Bet Big on Sin

By Nikhil Hutheesing - 2013-06-26T17:36:00Z

Photograph by Claudia Uripos/eStock

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Rhode Island

Sin Taxes, Percentage of Revenue: 5.16%
Total Sin Tax Revenue (2012): $144.6 million

Rhode Island went through a sweeping change in its tax system in 2011, cutting its top personal income tax rate from 9.9 percent to 5.99 percent. Sin taxes, meanwhile, have risen 31.1 percent in the past decade. The state’s cigarette tax of $3.50 per pack is the second-highest in the country after New York’s, according to the Tax Foundation, an independent, nonpartisan research organization.

“This state has high taxes because it is small, without a lot of industry and without corporate advantages,” says Joseph Henchman, a policy analyst at the Tax Foundation. He points out that Delaware gets fees from businesses that have incorporated, and Wyoming profits from tax on severance. Rhode Island, he says, stands out because it does not have a business base. The state is exploring a possible revenue boost of as much as $1 million from taxes on medical marijuana dispensaries.