If You Can’t Tax Marijuana, Tax Electricity?

Tax what you can find.  Tax what you can measure.  Humboldt County, California, is considering following the lead of Arcata and taxing excessive electricity use – associated with indoor marijuana grows.  Once electricity use exceeds a high threshold, the tax kicks in.

From Will Houston in the Eureka Times-Standard:

Third District Supervisor Mark Lovelace said that the tax would benefit the county in three ways — reducing environmental impacts, reducing housing stock that is “being consumed by grows” and generating revenue — but could not have them all at once.

”That benefit plays squarely against the other two,” he said. “The more of the first two benefits we realize, the less revenue we bring in.”


There are plenty of precedents.  For instance, the United States would like to tax the net income of offshore insurance companies selling policies here, but we can’t measure it.  Heck, we may not know if they even have income – they may have losses.  But if you can’t tax exactly what needs taxing, you can tax a proxy.  So Code section 4371 puts a 4-percent excise tax on gross premiums that U.S. persons pay to them.

And we can’t tax alcohol abuse, so we tax alcohol instead: an imprecise proxy.



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