Cumulating tax bases — CA BRC

July 24, 2015 § Leave a comment

Here’s a quote from the California Blue Ribbon Commission Report, in a section called “Tax Bases Over Time”:

“The Commission emphasizes the view that legalization is a process that will take time, not a one-time fix with all rules in place from the beginning and static in perpetuity. The state may benefit from implementing tax rules in phases or steps. Steps in the process may reflect and co-exist with an evolving and maturing marketplace. For instance, a low square footage tax or fee could be imposed at the outset of legal production. Shortly thereafter, the very first commercial sales might well bear a modest ad valorem excise tax. But the state could decide initially to delay imposition of weight-based or potency-based taxes for some period of time. There are two reasons to delay or phase in these taxes: first, to give the legal market time to compete with the illicit market, and second, to give the Board of Equalization time to create the rules and structure to collect the tax.”

The RAND Report for Vermont points « Read the rest of this entry »

California Blue Ribbon Commission report

July 22, 2015 § Leave a comment

The California Blue Ribbon Commission report on marijuana legalization is here or at  The major tax part starts on page 48, but there is some tax material scattered throughout.  I don’t agree with all of it, but I’m delighted to have been part of the Commission.

Oregon tax cut linked to 2,302 deaths

July 18, 2015 § Leave a comment

A few years ago, the economists Gregory DeAngelo and Benjamin Hansen wrote a paper looking at road deaths and injuries in the state of Oregon, which—in part because of a “tax revolt”—has cut the size of its highway patrol repeatedly since the end of the nineteen-seventies. “We find that Oregon would have experienced 2,302 fewer fatalities from 1979-2005 if the number of state police had been maintained at their 1979 levels,” the two concluded. « Read the rest of this entry »

Alcohol taxes save lives

July 18, 2015 § 1 Comment

From the May 4, New Yorker:

There is also a clear, demonstrated relationship between the cost of alcohol and the number of drunk-driving deaths. Research has shown that raising social awareness around drunk driving—as groups like Mothers Against Drunk Driving have done—is not enough. In most Western European countries, the sales tax on alcohol ranges between sixteen and twenty-five per cent. In the United States, it is somewhere between one-half and a third of the European rate—and because the federal excise is a flat amount (not a percentage of the sales price) it falls every year with inflation.

“There are extremely negative outcomes that are responsive to the price of alcohol, like highway fatalities,” the economist Philip J. Cook, who has written extensively on the subject, says. “I estimated that the tax increase associated with the 1991 excise tax saved sixty-five hundred lives the first year from trauma-related accidents of various kinds. It was an extraordinarily effective measure from the public-safety perspective. « Read the rest of this entry »

Don’t even THINK about taxing soda

July 15, 2015 § 2 Comments

Opponents of taxes don’t lack for arguments. Here’s an especially creative one, against proposals to tax sugary drinks: The very debate about the tax will be a waste of money – a “social cost”! Seriously.

Here is what Professor William Shugart, II, wrote in the Wall Street Journal:

“Wasteful rent seeking by advocates and adversaries of a selective tax can swamp its social benefits, if any. Suppose that a proposed tax is expected to raise $1 million in revenue over the medium term. Producers and retailers of soft drinks will be willing to spend up to $1 million to block the tax from being enacted; groups supporting programs financed by the revenue also will spend money to pass the tax. So, if $1 million (or more) is invested in lobbying, that sum is transformed into a social cost, which must be added to the already-heavy burden that every tax creates.” « Read the rest of this entry »

Swift’s Sex Tax and Stated THC

July 14, 2015 § Leave a comment

Here are three examples of how government can tax claims, false or true:  The old book income AMT, the stated THC tax for cannabis, and the Swaggering Stud tax in Gulliver’s Travels.

Let’s start back in 1727, with the “Swaggering Stud” tax. In Gulliver’s Travels, Gulliver listened to a “professor” who proposed this plan: The “highest Tax was upon Men who are the greatest Favourites of the other Sex, and the Assessments, according to the Number and Nature of the Favours they have received; for which, they are allowed to be their own Vouchers.” Decode the olde English, and you’ve got a tax on either promiscuity or boastful lies about sex.

You don’t care about the truth of how the Number and Nature of Favours received. The tax base is the claimed Favours. So the boastful liar gets taxed just like the truthful Casanova. Understating Favours received equals modesty, which Swift might approve of. So unreported Favours aren’t taxed.

OK, Swift was not serious. (He was a satirist.) But the approach of taxing claims, rather than something you can count and audit, is worth a look.

There’s precedent. There was once a federal alternative corporate minimum tax on “book” income — the income corporations reported to shareholders. The idea was that corporations couldn’t have it both ways – telling shareholders they were profitable, and telling the federal government they weren’t. So they were taxed on what they told shareholders – despite federal tax breaks and loopholes.
« Read the rest of this entry »

Taxes in Gulliver’s Travels — New HuffPo piece

July 14, 2015 § Leave a comment

In Gulliver’s Travels, Jonathan Swift ventured into tax theory; here is a HuffPo piece, or, that goes into his look at taxing Vices and Folly (a framework I use to analyze cannabis taxes), and more.



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