“How much revenue could the cannabis tax generate, under different scenarios?” — BOTEC Analysis Corp. I-502 Project #430-8b June 28, 2013 Final
Despite the June date, this document has not been widely distributed. It is stored permanently here: 8b_Tax_revenue_under_different_scenarios- Final; Continue reading Washington Marijuana Revenue: BOTEC analysis goes public
Yes, if states don’t stop the black market, it will flourish and keep tax receipts down. Here’s another story on the same issue.
A friend points out the more general problem: “The problem is akin to arguing that cash only businesses will drive out taxpaying businesses. They are a problem at the margins. ” And with restaurants, for instance, even those that pay tax may not pay all the tax they owe.
But tracking down bootleggers should be worth the effort. Enough enforcement will take away their economies of scale — which legal operations can obtain, if the federal government, too, goes after the illegal sector first.
The marijuana states don’t yet have analogs to the statutes barring possession of untaxed alcohol, like Missouri’s. But medical marijuana complicates the picture, because it is (typically) untaxed, but lawfully possessed.
As a tax man, I tend to react to proposals to prohibit something or other by saying . . . Slow Down. Mentholated cigarettes are reportedly worse than the others, so the FDA is thinking about banning them.
Instead of the all or nothing approach that the FDA is authorized to take, how about the measured approach of taxation? Make mentholated cigarettes cost a little more – just not enough to make bootlegging a big problem. But a tax change would require Congress to act, and Jimmy Carter says (albeit in a different context) that the United States has “no functioning democracy.” Anyway, people hate taxes these days. So we’re stuck with all or nothing. The only middle ground the FDA can stake out is to warn people that menthol is bad. Taxes would be more effective at tipping the scales a little bit.
Our local paper’s political columnist Rob Christensen writes this: “Trickle-down economics. Yes, the same warmed-over philosophy that the elder George Bush once called ‘voodoo economics’ and Sen. Bob Dole called ‘a riverboat gamble.’”
But Howard Baker, not Bob Dole, called it a riverboat gamble. Sources are here and here. Continue reading Riverboat Gamble: Correcting the News and Observer
If a jurisdiction wants to collect tax, it’s a good idea to tax something that is not easy to move. Boulder, Colorado, is taking what seems to me a nonproductive path for revenue with a 5 percent excise tax on producers.
I’m thinking that a small local tax on purchasers, a retail sales tax, might not send purchasers out of the jurisdiction. Each purchaser would make an independent decision about the burdens in time and money and the benefits of buying elsewhere. Meanwhile, a small local excise tax on producers Continue reading Designing Local Marijuana Taxes
A long and useful discussion on enforcement of marijuana taxes led me to post here some information from the most authoritative source on immediate post-Prohibition enforcement I have been able to find, Tun Yuan Hu, The Liquor Tax in the United States, 1791-1947: A History of the Internal Revenue Taxes Imposed on Distilled Spirits by the Federal Government (New York: Columbia University, Graduate School of Business 1950). I’d be glad to learn of other sources.
In 1934, the Director of the Federal Alcohol Control Administration, Joseph H. Choate, Jr., said that “bootleggers are now turning out from their stills alone, not counting smuggling and alcohol divertings, a quantity of spirits which cannot be much less, and may be more than we drank before prohibition — that the government is losing more taxes than it gets, Continue reading Policing the Illicit Cannabis Market After Legalization
The NY Times has been covering the North Carolina Legislature, especially tax activity. Back in December, I wrote that Republicans would seriously propose imposing taxes on all services (even those of doctors and . . . lawyers) and predicted it would be a nonstarter. Well, the idea went forward, and its main proponent, Bob Rucho, resigned as Chair of the N.C. Senate Finance Committee when it went up in flames.
Having worked on the Tax Reform Act of 1986 for Congress on the Joint Tax staff, I admire base-broadening, Continue reading North Carolina tax reform in the news