Revenue from marijuana gets a look

A humorous look at revenue from taxing marijuana is “Dude, Should Marijuana Be Legalized and Taxed?,” by Howard Gleckman, http://taxvox.taxpolicycenter.org/2012/12/06/dude-should-marijuana-be-legalized-and-taxed/

But the $9 billion it reports sounds a little low.  A strong revenue regime – after-tax prices unchanged, with government taking Continue reading “Revenue from marijuana gets a look”

An unintended consequence of alcohol taxes?

The United States did not tax alcohol between the end of the War of 1812 and July 1, 1862, when it started on a path of taxing the heck out of alcohol.  “[T]he importation of opium specially prepared for smoking purposes, which did not exist in 1865, has in latter years increased enormously; rising from 12,554 lbs. in 871 to 77,196 lbs. in 1880, and 298,153 lbs. in 1883; Continue reading “An unintended consequence of alcohol taxes?”

Replace NC Income Tax with Sales and Services Taxes?

Two independent sources tell me that Republicans, who now control the North Carolina Legislature and will soon gain the Governorship, plan to tax all sales and services at a uniform rate.  Nine percent might allow them to repeal the personal and corporate income taxes.  Local taxes could push the total take past 10 percent.

To keep the rate at 9 percent, they would have to tax everything:  hospital bills, prescription drugs, business services like lawyers’, you name it.  Once they make exceptions, the rate has to go up to stay revenue neutral.

Simplicity only, fairness not at all.  We’ll see what happens.  The history of taxation leads me to think fairness won’t be shut out for long.

National Marijuana Tax Revenue — $25 Billion?

Update at Huffington Post.  And there’s a caveat about my numbers being gross (not net of a 280E repeal).

America would probaly not see $25 billion in marijuana taxes, but that’s a straight line extrapolation from the most official estimate around.  According to an official state Fiscal Note,[1] Washington State’s enacted I-502 will raise some $564 million in taxes in fiscal 2015.  Extrapolating that per capita estimate, the revenue figure for the nation would be over $25.7 billion.[2]   That number is too high, probably, but not by an order of magnitude. Continue reading “National Marijuana Tax Revenue — $25 Billion?”

How Marijuana Taxes Are Not Like Cigarette Taxes — Yet

On Sunday’s MSNBC’s Up with Chris Hayes, Tony Dokoupil said, “Canada had to repeal a tax that was $5 an ounce in the nineties – because of evasion.”  So he reasons that marijuana selling at retail for $100 an ounce pre-tax cannot bear a $25 retail tax.  I think that’s way wrong.

Sure, people may not pay $5 per ounce extra a for tax-paid cigarettes when a reliable competing product comes hermetically sealed in a recognizable branded package, designed by a deep-pocketed manufacturer to prevent counterfeiting and having borne tax payment somewhere.  Virtually all the evasion of tobacco taxes in the developed world involves tax-paid product crossing jurisdictional borders.

For marijuana, there is no analogy to the pack of Lucky Strikes Continue reading “How Marijuana Taxes Are Not Like Cigarette Taxes — Yet”

A Surprising Tax Preference for Beverage Alcohol

I have the habit of thinking alcohol for the tax system is like low hanging fruit – easy to find and measure, and popular to tax.  Two arguments for taxing alcohol don’t exist for most commodities:  that alcohol consumption damages innocent parties and creates a price for society to pay, and more controversial, that we need to protect people from themselves and their longings.

But the Economist of November 24 page 72 says Korea goes in a quite different direction.

Punitive tariffs prevent brewing experimentation. The Korean taxman treats malt, hops and yeast as beer ingredients, which are subject to low import duties. Continue reading “A Surprising Tax Preference for Beverage Alcohol”

280E Tax Ignored in Federal Marijuana Bill

So several Members of the House introduced a bill, reproduced below, to keep the Federal Government out of states that have legalized marijuana.  They neglected to fix a huge tax problem for any state-legal marijuana business, Code section 280E, described by a source in the medical marijuana business this way:  “#1. The federal tax situation is the biggest threat to MMJ businesses and could push the entire industry underground.”  http://mmjbusinessdaily.com/marijuana-business-conference-wrapup-36-tips-lessons-take-aways-for-the-cannabis-industry/

Maybe the sponsors didn’t want the bill referred to the Committee Ways and Means.  Not that Continue reading “280E Tax Ignored in Federal Marijuana Bill”

Are high sumptuary and sin taxes liberal or conservative — or both?

Allen St. Pierre of the National Organization for the Reform of Marijuana Laws, speaking of successful initiatives to legalize marijuana, says, “We found both a liberal approach, in Colorado, and a conservative approach, in Washington.  We found two paths that work.” http://www.theatlantic.com/politics/archive/2012/11/the-secret-ingredients-for-marijuana-legalization-moms-and-hispanics/265369/.

Colorado’s approach is less restrictive on driving and home growing than Washington’s, but Colorado’s tax burden is much lower.  https://newrevenue.org/2012/10/23/gangs-ganjapreneurs-or-government-marijuana-revenue-up-for-grabs/.  So is the high-tax approach conservative, and the low-tax approach liberal?  Continue reading “Are high sumptuary and sin taxes liberal or conservative — or both?”

A Federal Marijuana Tax

 

Update at http://www.huffingtonpost.com/pat-oglesby/a-way-marijuana-dilemma_b_2490720.html

Legalization of marijuana in Colorado and Washington is bringing speculation about what the Administration will do in response.  No obvious answer appears, because the Executive Branch’s options are limited – the kind of situation the Founders intended when they split up power and gave so much to the Legislative Branch.

 

Congress could address the problem of state-legal marijuana.  (But what Congress is likely to do is  Continue reading “A Federal Marijuana Tax”

NC Tax Reform: Simplicity is the Enemy of Fairness

Two educated, informed liberals in my hearing recently advocated having NC tax all services, even medical services, at a low, say 2.5 percent rate, which would be the new, low sales tax rate for everything, even food and prescription drugs.

That is sacrificing fairness for simplicity.  Utterly.  Wow.  Maybe the Republicans would go for that if the Democrats took the heat on regressivity; Republicans will have the Governor and a supermajority in each legislative house.  But it’s unpopular to tax medicine, and once you start making exceptions, the slope gets slippery fast.

Marijuana Is Not Going Away

Folks who hoped marijuana legalization would go away have had a rude awakening. The victories in Washington and Colorado make the headlines, but the 46 percent yes vote in Oregon for a ridiculous legalization plan is the big shock.  Voters are desperate for change.

Oregon’s Measure 80 had no taxes.  It would have set up a state monopoly, Continue reading “Marijuana Is Not Going Away”

Progressivity in America: 1798

In 1798, the Fifth Congress enacted a progressive wealth tax. Then, for instance, a house worth $300 bore tax of 60 cents; a house worth $30,000 bore tax of $300 — that’s 500 times more tax on property worth 100 times more. Direct Tax Act, 1 Stat. 597, 599, http://constitution.org/uslaw/sal/001_statutes_at_large.pdf (a huge file also linked here).

But that experiment that didn’t last, maybe in part because it involved a cumbersome direct tax that had to be apportioned among states according to population. North Carolina, for instance, had to pay $193,697.96 – “and five mills.” Tennessee had to pay only $18,806.38 – “and three mills.”  There  was also a tax on slaves – 50 cents each. Folks in the North thought they were paying too much, and started Fries’ Rebellion.

If the tax brought in too much to bring in a state’s apportioned share, rates on houses were to be reduced. If too little, undeveloped land was to be taxed.

Here’s an excerpt: Continue reading “Progressivity in America: 1798”

A new tax base for marijuana — electrical use

In Arcata, California, in the heart of that state’s marijuana growing region, “Measure I on next week’s ballot would impose a 45 percent electricity tax on households — with medical and other exceptions — that use three times the amount of power a typical family home does.”  Jeff Bernard, AP, http://www.redding.com/news/2012/nov/04/arcata-targets-industrial-marijuana-growers-measur/ Continue reading “A new tax base for marijuana — electrical use”