Arm’s length marijuana tax rule in California — superseded

Don’t read this whole post.

Instead, a corrected view of how California’s retail tax works is here (at https://newrevenue.org/2017/10/27/90-day-rule-for-californias-15-percent-retail-marijuana-tax/).  So go there.

The superseded and incorrect material below, for the record, reflects my thrashing around before I understood what California was even trying.  Why anyone would want to read about that thrashing, I can’t imaginge, but I don’t delete much.  Nobody’s perfect. Continue reading “Arm’s length marijuana tax rule in California — superseded”

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State marijuana taxes today

Producer (medical, too, if bolded) Retail (medical, too, if bolded) Standard sales tax? Tax break for medical marijuana? Ratio of medical tax to adult use tax
Alaska $50/oz., unindexed 0 0 0 100%
CA $9.25, indexed 15% 7.5% on recreational 7.5% >67%
CO 15% (often weight proxy) 15% 2.9% on medical 27.1% 10%
Maine No 10% 5.5% on medical 4.5% 55%
Mass No 13.75% 6.25% on recreational 20% 0
Oregon No 20% 0 20% 0
Nevada Weight in lieu of 15% 15% 6.85% on recreational 15% 41%
WA No 37% 6.5% on recreational 6.5% 85%

This chart reflects my understanding as of 18 October 2017, and reflects recent changes in CO, MA, NV, and WA.  Comments and corrections welcomed.  A tweeted version overlooks Alaska’s full taxation of medical cannabis, corrected here by bolding $50/oz., unindexed above. Continue reading “State marijuana taxes today”

Full Repatriation Now

Why we have a right to tax deferred off-shore income, beyond allowing shareholders the limited liability of a U.S. corporation, by Steve Shay, building on the analysis of my hero, Charles I. Kingson, in The Great American Jobs Act Caper, http://heinonline.org/HOL/LandingPage?handle=hein.journals/taxlr58&div=17&id=&page= (paywall).

“The primary businesses of [the 10 biggest beneficiaries of the repatriation tax amnesty windfall] rest on one or more of: (i) technology patents, copyrights, and trademarks created under the protection of U.S. laws; (ii) U.S. food and drug approvals authorizing access to and assurance to U.S. healthcare consumers; (iii) the internet developed by the U.S. government and transitioned to private hands; or (iv) leases of valuable rights to U.S. oil and gas natural resources. All of these are fruits of U.S. public goods and legal infrastructure developed and maintained with U.S. taxpayer dollars. Yet, these companies have been permitted to routinely use transfer pricing and stateless income planning techniques to pay extraordinarily low rates of tax on vast swathes of their income—and now the plan is to give them an amnesty rate on pre-effective date earnings?”

https://www.finance.senate.gov/imo/media/doc/Shay%2010-3-17%20SFC%20Testimony%20final%209-30.pdf

 

Inaccurate info about cannabis taxes

I’ve consistently said marijuana taxes can be too high at first. Fitch Ratings warns of that too, but supports its warning with this inaccurate statement: “Colorado, Washington and Oregon each lowered their cannabis taxes following legalization to address black market competition.”  https://www.fitchratings.com/site/pr/1029632. But it would be nice to get the facts straight.

Fitch apparently relies on material published April 20, 2016 (4/20 – get it?) by the Tax Foundation, which alleged, “Colorado, Washington, and Oregon have all taken steps to reduce their marijuana tax rates.” That was questionable too, even at the time, but there’s another problem: “lowered” is not the same as “taken steps to lower.”

Let’s start with Colorado. Continue reading “Inaccurate info about cannabis taxes”

Border Tax Adjustments for Carbon Taxes — The ODC Model

The killer problem for carbon taxes is that they favor foreign manufacturers, and we want manufacturing jobs. Any carbon tax will provoke calls for border adjustment taxes – or border tax adjustments (BTAs). The difficulty in imposing BTAs is great. Professor Peter Barnes of Duke has guided my thinking on the issues involved, and some of this comes directly from him.  But this is my primitive thinking, for which he is not to blame.

How can we distinguish between imported goods that were manufactured using coal-generated electricity and goods manufactured using solar energy?  To create the right incentives, we should make that distinction.  But administering the distinction is impossible.    Continue reading “Border Tax Adjustments for Carbon Taxes — The ODC Model”

Mechanics of stated THC tax on marijuana

UPDATE 27 November 2017:  A stated THC tax can also serve as an alternative to a percentage of price (ad valorem) tax.  Such price-based taxes are typically the first cannabis taxes to appear.

A cannabis flower tax could be imposed as the greater of a weight tax or a stated THC tax (using the THC figure the seller claims on packaging or in selling). The tax could be the greater of (1) $x per gram of product weight or (2) $Y per gram of stated THC weight.

Here are very rough notes on how such a tax might work (supplemented by comments from my friend Jon Caulkins at the end).

Example 1: Continue reading “Mechanics of stated THC tax on marijuana”