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. Continue reading Alcohol taxes save lives
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.” Continue reading Don’t even THINK about taxing soda
It’s hard to measure THC in bud or flower accurately enough to tax. Take a look at some of the science here.
But you might tax what sellers say is the THC content of their product.
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 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.
Continue reading Swift’s Sex Tax and Stated THC
In Gulliver’s Travels, Jonathan Swift ventured into tax theory; here is a HuffPo piece, or http://www.huffingtonpost.com/pat-oglesby/taxes-cannabis-gulliver-j_b_7761696.html?utm_hp_ref=tw, that goes into his look at taxing Vices and Folly (a framework I use to analyze cannabis taxes), and more.
Here’s a chart that’s causing a lot of consternation and misinterpretation:from https://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/03/why-greece-and-germany-just-dont-get-along-in-15-charts/?hpid=z1
x/y = .895. So uncollected receipts are nearly as big as collected receipts. If collected receipts are 100, uncollected receipts are 89.5, right?
If you believe that, Greece collects only a little over half (100/189.5) of what is due? But wait!
Bill Turnier sent me here, or http://www.bbc.com/news/magazine-33479946: The numerator seems to be all outstanding uncollected taxes, from years and years — not just the current year. Continue reading Tax Evasion in Greece
Colorado’s so-called-but-not-really 15 percent producer tax on non-medical cannabis, starting July 1, is 61 cents a gram for bud, and 10 cents a gram for trim. Colorado actually taxes cannabis at the producer level by weight, though its Constitution requires a 15-percent excise tax at the producer level. (It’s disheartening when reports overlook the actual tax method, though many do, even now.) This weight tax is supposed to reflect previous prices. Since the weight tax has reached its all-time low, previous prices have, too, the State indicates.
Those per-gram numbers are calculated from non-metric numbers in the chart below, which comes from the state. You take 15 percent of the “Rate,” and divide by 453.592, the number of grams in a pound. Colorado’s tax on bud started at 62 cents, rose briefly to 66 cents, and now is at 61 cents through the end of 2015. Continue reading Colorado’s bud tax $0.61/gram — Updated 12:53 p.m. July 13, 2015
In 2013, I gave an hour-long talk on marijuana legalization for the North Carolina Bar Association. I recall that when I suggested that our land grant university do the growing, one man literally walked out – as if to say, “That’s so far-fetched that I don’t have to listen to this nonsense any more.” (Maybe that’s not why he left, but he was muttering something.)
Well, in Louisiana, state universities are in line to grow cannabis, by statute. That sounds like a good idea — if you take the RAND view that government sellers are likely to be among the least interested in creating demand. Get the agriculture school, and the botanists, and the chemists, and the public policy people, and the medical school, and the law school, and maybe even the business school to figure this out. Put the grow area on public access cable, 24/7.
If you want a safe provider of cannabis, a land grant university would look to be at the top of the list. In Louisiana, that means LSU and HBCU Southern University. Here’s the statutory language: Continue reading Grow cannabis in land grant universities?