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Sometimes, a tax can effectively be insurance for liability.

Sin taxes, e.g. alcohol or tobacco tax, in part help pay for the social cost of those activities.



As the name implies, sin taxes are taxes to discourage use. Tobacco smoking, for instance, likely saves tax payers money because:

1) Smokers pay more in taxes through tobacco purchases.

2) Smokers die way earlier, so there are less social security payments and fewer medical expenses.


No, that's just how they're sold.




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