Origin of 280E

Senator Bill Armstrong (R-Colorado), not Senate Finance Committee Chair Bob Dole, was the originator of the 280E marijuana tax in 1982. That comes from an article I just ran across.*

I had thought that Bob Dole’s staff had come up with 280E for him, but now vaguely recall Senator Armstrong speaking about it during markup. (I was on Joint Committee on Taxation staff, working on international tax, but sat through markup of a lot of other provisions.) I’m sure no one on the Committee opposed it.  I imagine that Treasury or Joint Committee staff made noises about treating all income equally, to no avail.

280E came into the 1982 Tax Act during Senate Finance Committee markup, without a hearing — and without a divided vote.  My earlier impression, checking back earlier with colleagues, was that Senator Dole just put it in the bill.  Now my impression is that Senator Armstrong probably asked him to, and he agreed, and no one objected.  This happened after I started work at Joint Tax in May 1982.

Here’s a link to the Armstrong bill, introduced in March 1982: https://www.congress.gov/bill/97th-congress/senate-bill/2212, S.2212 – A bill to amend the Internal Revenue Code of 1954 to disallow a deduction for expenses paid or incurred in connection with the illegal sale of drugs.

I think it’s useful to think about extending nondeductibility of selling expenses to alcohol, tobacco, and opioids. For cannabis, I think it taxes what the public legitimately dislikes and fears — the Joe Camel billboard, this time for cannabis. The main cannabis consumer lobby likes part of it: https://newrevenue.org/2017/02/16/5139/.

And then there’s the nondeductibility of lobbying expenses under section 162. They may be the business expenses with the greatest ROI.

Here are some pros and cons of 280E:  How Bob Dole got America addicted to marijuana taxes | Brookings Institution https://www.brookings.edu/blog/fixgov/2015/12/18/how-bob-dole-got-america-addicted-to-marijuana-taxes/

  • Kitty Richards, An Expressive Theory of Tax (April 1, 2017). Cornell Journal of Law and Public Policy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3066375.



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