Photograph by Walter Bibikow/eStock
Sin Taxes, Percentage of Revenue: 4.61%
Total Sin Tax Revenue (2012): $1.1 billion
Michigan is one of the few states where sin tax revenue has declined. Revenue from taxes on alcohol, tobacco and parimutuels fell 7.5 percent from 2011 to 2012, even though the state’s excise tax on cigarettes of $2 per pack is the 10th-highest in the nation. That rate, along with a decline in smoking, could help explain the drop in revenue. According to a study from the Mackinac Center for Public Policy, a nonpartisan research and educational think tank, Michigan’s tobacco tax revenue is under siege partly because many residents head to cheaper destinations to buy cigarettes. In Indiana, for example, Michigan residents can save as much as $10 in taxes on a carton of cigarettes. Tax revenue on all tobacco products totaled $968.5 million in 2012; the funds go to the school system, Medicaid and other health initiatives.