My state of North Carolina is considering a Taxpayer Bill of Rights, like Colorado has. Some current Legislators want to tie the hands of future Legislators, who might be of the other party. Well, from the Denver Post, here’s the kind of crazy outcome that leads to:
Colorado will repeal sales taxes on marijuana Sept. 16, thanks to a quirk in its constitution.
The one-time-only holiday from the 10 percent state sales tax on recreational pot is likely to generate buzz in the first state in the nation to legalize marijuana.
The little-noticed provision is part of a larger bill that Gov. John Hickenlooper signed into law Thursday that includes a ballot initiative in November and a permanent tax cut on recreational pot sales in 2017.
“This fiscal glitch that we have with the constitution … that’s part of the magic of living in Colorado,” the Democratic governor said.
The impetus is the Taxpayer’s Bill of Rights, a measure championed by conservatives. The constitutional provision requires voters to approve new taxes based on estimates of collections and state spending. If the actual amount exceeds the estimates, refunds are necessary.
Colorado isn’t collecting more pot taxes than expected — actually, the amount is far less than projections — but total state spending exceeded initial estimates because of the improving economy.
Full story here or at http://www.denverpost.com/news/ci_28252221/colorado-offer-one-day-tax-holiday-marijuana
Tax scholar and Columbia Professor Mike Graetz, whom I knew briefly in the 1980s, has released a detailed look at carbon taxes, subsidies for energy efficiency, cap-and-trade, and more. It’s downloadable here or at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2640659. He makes the case for carbon taxes, but despairs of their enactment.
Here’s a description of the book from which that download is excerpted, from http://taxprof.typepad.com/taxprof_blog/2015/08/graetz-the-end-of-energy.html#more:
In The End of Energy, Michael Graetz shows us that we have been living an energy delusion for forty years. Continue reading Carbon taxes — Mike Graetz
The International Centre for Science in Drug Policy says here that we shouldn’t worry that Big Marijuana will be the kind of problem that Big Tobacco is. “Restrictions on advertising, requirements for product labelling on health harms, and investments in public education are regulatory controls that do not foster a large commercialized industry and can be adopted,”
The part about advertising is true in Uruguay and in many other places. But in the United States, advertising is harder to stop for cannabis than for tobacco. Big Tobacco signed away some of its Constitutional right to advertise in the Master Settlement Agreement. That is, they agreed, as part of the deal settling lawsuits, to limit advertising that they had a Constitutional right to publish. There’s no reason to think the cannabis industry will sign away anything. Is there? Continue reading Cannabis ads
The market situation with illegal cannabis in some jurisdictions today calls to mind the situation with liquor before the Union started taxing it to help finance the Civil War. Here’s an excerpt from The elements of public finance, the 1899 classic by Winthrop More Daniels.
It took decades to get the new tax humming.
- Repeal of the 280E would be scored as a revenue loser by the Joint Tax Committee.
- Repeal of the Controlled Substances Act, or legislative removal of marijuana from the CSA’s bad list referred to in 280E, would be scored as a revenue loser by the Congressional Budget Office in coordination with Joint Tax. For example, when Congress enacted requirements that the motor fuel fleet have certain specified amounts of biofuels, the budget needed to take account of the tax benefits for ethanol and biodiesel. So, as that legislation proceeded, Joint Tax worked with the CBO in reporting its budgetary cost.
- Administrative removal of marijuana from the CSA’s bad list would entail adjusting the base line down to reflect the revenue loss. In that case, the deficit would be known to be bigger because of administrative action. This third scenario does not bring into play restraints on Congressional budget busting, since Congress does not act.
Loosening rather than repeal or effective repeal of 280E would be scored similarly, but with less budget damage.
I’ve been saying that cannabis reformers might put banking reform ahead of 280E repeal on their wish lists, because cutting taxes is hard in a time of deficits. Repeal by Act of Congress would be a revenue loser, and would have to be paid for. The obvious way to pay for it is a federal marijuana tax.
But Dale Gieringer of California NORML points out that New York Times calls for removing marijuana from the Controlled Substances Act altogether. That would take away the 280E problem for the industry, because 280E operates by cross-reference to that Act. Here’s the kicker: If 280E is removed administratively, the revenue loss won’t be scored; Continue reading Revenue loss from 280E
As a fan of British novelist Anthony Trollope, I appreciate this excerpt by Adam Gopnik in the New Yorker about political reform involving moving ideas “into the realm of the plausible”:
Trollope, quite uncynically, understands both what’s necessary to make the world go round and which way the world ought to be made to turn. Continue reading Trollope on Reform
Corrected and updated here or at https://newrevenue.org/2015/08/10/revenue-loss-from-280e/.
The New York Times calls for broad federal cannabis reform, including rescheduling and access to banking. But it doesn’t mention another key demand of reformers – getting Congress to repeal the extraordinary federal tax on cannabis. That’s 280E, which denies deductions to cannabis businesses other than for cost of goods sold.
There are at least three reasons for reformers to put 280E at the bottom of their wish lists.
— As a practical matter, cutting taxes is hard in a time of deficits. Repeal would be a revenue loser, and would have to be paid for. The obvious way to pay for it is a federal marijuana tax. Continue reading NYT and 280E — Update 3:37 EDT 9 August 2015