Quoted in Harper’s

“It’s too hard to adjust taxes quickly enough,” said Pat Oglesby, a North Carolina tax lawyer who was chief tax counsel for the Senate Finance Committee from 1988 to 1990 and who now researches marijuana taxes. “Legislatures love lowering taxes. Getting them to raise taxes is like pulling teeth.” What’s more, if legislators overdo it and set taxes too high, they’ll risk reawakening a black market in untaxed drugs. — Dan Baum, in Harper’s:

Here’s some context, from the article:

Just about everybody who thinks seriously about the end of drug prohibition agrees that we’ll want to discourage consumption. This goal could be accomplished, at least in part, under a system of regulated, for-profit stores: by setting limits on advertising and promotion (or banning them altogether), by preventing marketing to children, by establishing minimum distances from schools for retail outlets, by nailing down rules about dosage and purity, and by limiting both the number of stores and their hours of operation. In a for-profit system, however, the only way government can influence price — the strongest disincentive to consumption — is by levying a tax, and getting taxes right is no small task. First, on what basis should the tax apply? Federal taxes on alcohol are set according to potency, but keeping up with the THC content of every strain of marijuana would be impossible. Weight? The more potent the drug, the less you need to buy, so taxing by weight might end up promoting stronger drugs over weaker. Price? Post-legalization prices are likely to plummet as the “prohibition premium” — which compensates dealers for the risk of getting caught — disappears, competition sets in, and innovation increases production. To keep prices high enough to discourage use, legislators will have to monitor those prices constantly and risk their jobs by pushing for politically unpopular tax increases.

“It’s too hard to adjust taxes quickly enough,” said Pat Oglesby, a North Carolina tax lawyer who was chief tax counsel for the Senate Finance Committee from 1988 to 1990 and who now researches marijuana taxes. “Legislatures love lowering taxes. Getting them to raise taxes is like pulling teeth.” What’s more, if legislators overdo it and set taxes too high, they’ll risk reawakening a black market in untaxed drugs.

  The rest of the article is very, very good.  Harper’s called me weeks ago to fact-check the quote.  Slow process, but very good article.

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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