Job-centric 280E Reform

Reading in the NYT today, about Intel’s Andy Grove: “There was room for improvement, he argued, for what he called ‘job-centric’ economics and politics. In a job-centric system, job creation would be the nation’s No. 1 objective, with the government setting priorities and arraying the forces necessary to achieve the goal, and with businesses operating not only in their immediate profit interest but also in the interests of ‘employees, and employees yet to be hired.’”

Tax rules can nudge toward job creation: In 2013, I suggested some loosening of the 280E tax on marijuana selling expenses:

“And what about salaries of retail clerks? Effective, motivated sales people can stoke demand. But legislators may be more concerned about creating jobs than about dampening demand for marijuana. So they could cap the tax deduction for pay to for sales people, say at the level of the minimum wage. That approach would tend to favor jobs — and spread them around. So pay for successful, high-priced salespeople could be only partly deductible — only up to $7.25 an hour, with the excess nondeductible. The possibilities are endless. A hodge-podge of rules reflecting conflicting policies — like much of today’s Tax Code – could result from an effort to fix 280E.”

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Rethinking that: Looser rules than a minimum wage cap could do more to create jobs. For instance, payments to full-time employees (defined as those eligible for health care) up to a maximum of some figure ($50,000 a year) could be deductible. That’s in addition to cost of goods sold, which is already deductible.

That nudges marijuana businesses into spending money on full-time jobs for employees – not contractors, or gig workers, or professionals. And not very much for high-paid workers.

The main advantage of 280E is its drag on advertising.  That would stay pretty much intact.

Lots to think about.  This job-centric change won’t satisfy the industry, but still.  For more on using marijuana laws to reduce inequality, look at this — https://newrevenue.org/2015/09/30/sanders-pot/.

 

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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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