280E and Tax Reform

My friend Tom Angell, who compiles marijuana news diligently and fairly, has a partially paywalled piece on the prospects of repeal or reform of the 280E marijuana tax.

He writes, “While rescinding the provision’s application to state-legal cannabis providers is a matter of basic fairness, it would also, on its face, amount to a large tax cut from current rates for those businesses. And that could be a roadblock to success, as Republicans are already struggling to find ways to pay for broader tax cuts they are proposing in the plan. “

I have a less-opposed view toward 280E, as Tom notes. But as for Congress cutting the 280E tax, I’d say the big problem is not the cost of 280E fix, but the slippery slope argument. If the 280E tax gets fixed with a meaningful revenue cost (https://newrevenue.org/2017/02/02/5119/), other taxpayers will insist on fixing other problems that Members are sympathetic to – like the marriage penalty. Then you get in a Christmas tree situation, https://en.wikipedia.org/wiki/Christmas_tree_bill, which could cause the whole tax cut project to stall. So I would expect any tax bill that advances to have a “no loosener” (no industry-specific revenue loser) rule.  Having been a Joint Congressional Tax Committee staffer during the Tax Reform Act of 1986, when the idea was “Everyone suffers to get rate cuts,” rate cuts are the only tax cuts I can see surviving.  But we’ll see.  

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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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