You hear people say the Tax Code is complex because it has so many words. Good article here.
But to measure tax complexity, don’t count words in the statute; count
— the number of lines in forms you have to fill out.
— the hours it take to figure your taxes.
— the days until you know for sure the amount you owe. Continue reading Measuring tax complexity
For tax evasion, there’s an optimal level of enforcement, and an optimal level of crime. You can’t “wipe out” the black market. You can reduce it to a tolerable level. There’s an optimal size of the black market, probably consisting, as suggested below, of “relatively small violators.”
There is still moonshine being made in the mountains of North Carolina, I imagine, but not enough to matter – not enough to be an economic threat to the commercial liquor market that’s regulated and taxed. For law enforcement to scour the mountains every week in search of that last moonshiner would be hugely expensive to the point of being silly and counterproductive. No one I know buys non-tax-paid liquor, and you can’t find it on Craigslist. It took a while after repeal of alcohol prohibition for the black market in liquor to die down.
Before repeal, President Roosevelt’s team put it this way: Continue reading The optimal amount of crime is not zero.
The Christian Post reports:
Indiana’s marijuana-smoking church has been incorporated as a tax-exempt religious organization by the Internal Revenue Service according to the church’s founder.
Bill Levin, the founder of the First Church of Cannabis, Continue reading Indiana Church of Cannabis claims it has 501(c)(3) status
To beat the illicit cannabis market, you need some combination of law enforcement and low taxes. So it makes sense to set tax rates low, to start. Then, as the industry matures, and pre-tax prices come down, you can phase in higher tax rates. You need a tax burden that leaves the after-tax price competitive with the black market price. Most folks will prefer the legal product just because it’s legal. Testing and packaging add value, too. So your aim for an after-tax legal price could be roughly at the black market price. As it changes from day to day.
But what rate do you start with? Maybe even zero, a tax holiday – as a transition measure.
So I’m questioning a proposal to beat the black market that has surfaced in Oregon: Switch from taxing by weight (which voters approved last November) to taxing by percentage. Here’s Jeff Mapes’ story: Continue reading Oregon’s wrong direction
Click to see the entire chart, which examines various tax bases for cannabis — or go to page 86 of the RAND Report, Considering Marijuana Legalization: Insights for Vermont and Other Jurisdictions, http://www.rand.org/pubs/research_reports/RR864.html. That Report explains the conclusions that the chart reaches.
UPDATED May 24: “Seth Crawford, a marijuana policy researcher at Oregon State University, estimates the state grows three to five times the 150,000 pounds or so consumed by Oregon pot users,” writes journalist Jeff Mapes.
So shifting from a tax on producers to a “point of sale tax” at retail, described at https://newrevenue.org/2015/05/20/oregon-shifts-to-retail-percentage/, would leave the bulk of production tax-free, for export, right? No wonder growers don’t want to pay tax. Or am I missing something? UPDATE: A friend says I am: Continue reading Collection point loophole?
Preface by PO to the expert’s comments:
If you tax marijuana by canopy area – square feet of space under cultivation – you might be able to measure the area by aerial or satellite images. That comports with a principle of taxation – tax what you can measure. The RAND Report for Vermont says potency of raw flowers, and, in many cases, price, can’t be reliably measured. So canopy area has a lot of appeal as a tax base.
But those images won’t detect indoor cultivation. Here is some earlier discussion and criticism of an electricity tax aimed at singling out indoor growers. Meanwhile, more powerful batteries may make it harder for law enforcement to detect indoor grows – while reducing the environmental harm from those grows.
But if you want to collect tax on all commercially grown marijuana, what should you do?
I don’t necessarily agree or disagree with the following comments. But they help the process.
An expert in the industry has this to say:
“What would you do about indoor cultivation is levels and levels of tricky. This will take heavy lifting. Continue reading Indoor grows and canopy tax — An expert comments