The Tobacco Deal

Abstract
In this paper we touch on the economic issues of the 1997 Tobacco Resolution and the proposed legislation that was used to settle tobacco litigation in the United States. With settling the lawsuit in return for tax increases, the Resolution was a great example of a "win-win" deal. The taxes would cost the companies about $1 billion per year, but the government about $13 billion per year, and allow the lawyers involved to claim fees based on hundreds of billions in "damages". We found that alternative taxes would be considerably greater to those proposed. …