The Center for New Revenue

Calculating marijuana taxes as a percentage of price creates the danger that taxes will be both too high and too low.

Taxes may be too high at first, as start-up expenses push costs up with resulting upward pressure on pre-tax prices.  Those high prices will be magnified by taxes that rise with the price level.  Taxes that are too high open the market to competition from bootleggers, with the pernicious results of (1) low actual collections and (2) continuing illegality.

Later, as economies of scale drive pre-tax prices down, taxes will shrink proportionately.  Low prices create another problem:  Continue reading “Percentage-based taxes for marijuana are too volatile.”

I’m just back from a couple of weeks in France, where the term for tax haven is “paradis fiscal,” directly translated via cognates as fiscal paradise  — or tax heaven.  How they and we got the terms is not clear, but the difference in meaning is not very subtle:  “En anglais, l’expression correspondante est tax haven (« refuge fiscal »).”   Continue reading “Tax haven, tax heaven”

Faced with three choices about how to deal with legal medical marijuana, voters in Los Angeles chose to increase taxes and tighten control.  Only Measure D, raising taxes by 1 percent to 6 percent and tightly restricting the number of retail dispensaries, won a majority — 63 to 37.   Continue reading “LA Marijuana Vote: Tax and Tighten”

“President Jimmy Carter, at a meeting . . . predicted the experiments in Washington and Colorado would go badly.  In his speech Friday, Carter was more cautious about what could happen in Colorado and Washington.”

Marijuana would be taxed less than cigarettes in both states.  That’s kind of a red flag.

That’s just the tip of the iceberg.  “There should be no advertising for marijuana in any circumstances and no driving under the influence,” he said.   Continue reading “Jimmy Carter, Marijuana, and Revenue”

In France, contributions to churches and charities are treated just  contributions to political parties:  taxpayers get a 66 percent CREDIT for contributions up to 20 percent of income.  (Mighty generous.)  My old French major in college finally comes in handy, if I’m reading this right.

OK, the IRS scandal arises from treating political and charitable ENTITIES differently, Continue reading “Avoiding the IRS scandal the French way”

The power to tax is the power to destroy, or at least discourage.   As an advocate of higher, indexed taxes on alcohol, I don’t get North Carolina Senate President Pro Tempore Phil Berger’s “North Carolina Tax Fairness Act” proposal to impose sales or services taxes on prescription drugs and doctors’ fees.

Some of the Locke Foundation group would tax alcohol like milk, and tax doctors like tattoo artists.  Seriously.  Look at  Roy Cordato, Sales taxes and free choices, (May 25, 2010), http://www.newsobserver.com/2010/05/25/v-print/498695/sales-taxes-and-free-choices.html. 

I understand that folks distrust government, and I don’t blame them.  Distrusting government was at the top of the Founders’ agenda.  And once government starts picking winners and losers, it can get carried away.  But to insist on neutrality — to oppose having government make any distinctions — is to throw out the baby with the bath water.  Taxing medicine and doctors’ visits takes the principle of neutrality to an extreme.  I don’t think they’ll make that happen.

North Carolina Senate President Pro Tempore Phil Berger floated a notional “North Carolina Tax Fairness Act” last week.  Its provisions are unclear.  It would impose sales taxes on prescription drugs and even reportedly services taxes on doctor’s fees, but it remains a mystery.  I  tried to get the specifics last week via phone and email (http://nctaxcut.com/q-and-a/), but have received no reply.  If you find the plan, I’d appreciate knowing about it:   po@newrevenue.org.

Oglesby slides final for NCBA May 9, 2013 sent in:  A big file, with lots of images.

“The Home Court Advantage” is the label U.S.-based multinationals associated with the Business Roundtable want to apply to their territorial tax proposal.  The problem is that the territoriality they propose gives tax preference to their foreign investments. That’s how territoriality works:  we would tax their American income and not tax their foreign income.  Yes, they would give home investments a disadvantage while wrapping themselves in the flag.

What’s their defense for twisting words this way?  Continue reading “Orwellian Doublespeak from multinationals”

I’m getting closer to concluding that smokable marijuana should be taxed by weight, and edibles by potency of the processed material in them.  Asking around, I got this confirmation from someone who knows lots more than I do:

I’ve formed a new North Carolina nonprofit, the Center for Sensible Revenue.  Some allies like the name better than Center for New Revenue.  Heck, I started out with the label New Taxes, so I’m moving toward the mainstream.  Still keeping http://www.newrevenue.org.

Representative Diane Russell’s marijuana legalization bill in Maine would impose a $50 per ounce tax — and unlike so many others, includes indexing for inflation. Continue reading “Maine bill gets indexing right”

Wherever marijuana is legal, it will be taxed.  Federal Code section 280E is broad, but it has the salutary effect of denying tax deductions for advertising.  (Whatever your view of legalization, public policy ought to discourage advertising for marijuana as it does for lotteries, alcohol, and tobacco.)  Colorado income tax law tracks federal law, so Colorado ganjapreneurs can’t deduct advertising expenses on their state returns, either. So far.  A bill in the Colorado House would change that. Continue reading “Encouraging marijuana advertising: Colorado House Bill 13-1042”

There are two kinds of commercial marijuana:  raw, and processed.  Processed is more powerful.  We can tax the raw stuff like beer, and the processed stuff like liquor.

That is, the base of a marijuana tax would be weight for raw — smokable product; and potency for brownies, tinctures, and everything else – potency by THC content, maybe with a CBD factor – and maybe further refinements as we learn more.

A pure percentage tax like ALL MARIJUANA TAXES SO FAR makes me nervous.  The reason is that NO OTHER “SIN” TAX works off pure percentage of price so far as I know.  Continue reading “Tax marijuana: raw by weight, processed by potency?”

Executive Summary:  We override treaties all the time.

Some folks point to old U.S. commitments to ban marijuana in a series of multilateral treaties as a show-stopper for marijuana legalization.  In 1961, the United States agreed to ban it  in the Single Convention on Narcotic Drugs, https://www.unodc.org/pdf/convention_1961_en.pdf, so those folks say we shouldn’t change our rules.  They list, as an option, this:  “If UN antidrug treaties are construed as prohibiting federal legalization, they should be amended to eliminate provisions that produce such a reading.”  That’s from Steven B. Duke, “The Future of Marijuana in the United States,” http://law.uoregon.edu/org/olr/volumes/91/2/documents/Duke.pdf.

Amending a treaty with scores of signatories is impractical to the point of impossibility.  Are we stuck?

No.  We can, we repeatedly and deliberately do, and we should change our internal laws in the face of conflicting treaty obligations that have  become or have been proven nonsensical.  (We override the treaty by statute;  some prefer the terms “breach” or “violate,” but “override” is the  tax term.) Continue reading “Treaties, Tax, and Marijuana”

This just came out:  http://law.uoregon.edu/org/olr/volumes/91/2/documents/Caulkins.pdf.  It looks thoughtful and thorough.  UPDATE:  Better link: https://scholarsbank.uoregon.edu/xmlui/bitstream/handle/1794/13603/Caulkins.pdf;sequence=1

The most fertile ground for sensible legalization is in the handful of states that don’t have medical marijuana, voter initiative, or private liquor stores.

1.  No legal medical marijuana.  Ongoing, permanent special rules for medical use make no sense under full legalization.  But medical use is a box canyon, as they say out West – you can get in, but you can’t get out.  Even now, Continue reading “Eight States, three criteria: The best chance to control marijuana”