We study the effects of traditional cigarette and
e-cigarette taxes on use of these products among adults in the United States. Data are drawn from the Behavioral Risk Factor Surveillance System and National Health Interview Survey over the period 2011 to 2018. Using two-way fixed effects models, we find evidence that higher traditional cigarette tax rates reduce adult traditional cigarette use and increase adult e-cigarette use. Similarly, we find that higher e-cigarette tax rates increase traditional cigarette use and reduce
e-cigarette use. Cross-tax effects imply that the products are economic substitutes. Our results suggest that a proposed national e-cigarette tax of $1.65 per milliliter of vaping liquid would raise the proportion of adults who smoke cigarettes daily by approximately 1 percentage point, translating to 2.5 million extra adult daily smokers compared to the counterfactual of not having the tax.