The Center for New Revenue

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”

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”

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?”

 

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”

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.

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”

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”

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”

As a dull tax person, I don’t seem to know much about drawing a crowd.  For a scheduled Continuing Legal Education presentation on alcohol excises, my draft description of a lecture got totally revised: Continue reading “The Obliviousness of the Tax Person”

“[L]egal pot would be amazingly cheap. In fact, midgrade stuff would be so cheap that it might make sense for businesses to give it away like ketchup packets or bar nuts.” Continue reading “The Preposterous Tomato Model for Marijuana”

In Gangs, Ganjapreneurs, or Government: Marijuana Revenue up for Grabs, I say about Colorado’s Amendment 64, “If problems develop, the legislature can override the 15-percent cap and revise the whole scheme even before 2017 – if voters go along.”  Wrong, but there’s a different solution.  Continue reading “Oops! A Different Fix for Colorado”

Gangs, Ganjapreneurs, or Government — Marijuana Revenue Up for Grabs links to a soft copy.  State Tax Notes, Volume 66, Number 4, pages 255-269 (October 22, 2012) has a hard copy.  The  more recent “Oops” post at https://newrevenue.org/2012/11/02/not-so-fast-in-colorado/ has a correction.

With three states voting on legalization and taxation in November, here is the text (updated) of the State Tax Notes 2011 cover story on marijuana taxes:  https://newrevenue.org/wp-content/uploads/2011/01/8-june-2012-taxing-marijuana.pdf has a table of contents; Laws To Tax Marijuana — published version in State Tax Notes.

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FedEx’s Fred Smith says don’t tax foreign income — but treat U.S income even better.  Instead of taxing corporations, government should subsidize corporations?

‘”Smith . . . calls for a ‘territorial tax system,’ which would tax only domestic, rather than worldwide, income, bringing U.S. practice in line with most other rich countries’.” http://www.time.com/time/magazine/article/0,9171,2119336,00.html#ixzz21lFGEgwt

The article goes on:   Continue reading “Outrage of the Day: Tax Domestic Income Less Than Foreign Income, and Foreign Income Not at All”

Any tax action that Congress takes requires a revenue estimate — except for treaties.  That’s a budget rule, adopted by Congress.  The revenue cost of treaties is isn’t being analyzed — but there is a cost, because treaties only cut taxes.  Treaties can’t raise taxes, because revenue raisers must begin in the House of Representatives — and only the Senate gets in on treaties.  Occasionally, the beneficiaries of tax treaties are wealthy individuals, but usually they are multinational corporations — entitled to free speech under Citizens United.  Here’s an explanation and more, from my former colleague Pat Driessen from Joint Tax:  Tax Notes, Vol. 135, No. 6, 2012, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2069356.

“Tax” is no longer at the bottom of the label barrel.  Proponents of the Oregon Cannabis Tax Act, http://octa2012.org/oregon-cannabis-tax-act-legislation/, just approved for the November 2012 ballot, deliberately put “Tax” in the title – but not in the Act.  The Act provides for a state monopoly to sell marijuana (and a state monopsony to buy it) – but no taxes.  Oregon doesn’t even have a sales tax.

Maybe it’s just that Tax sounds better than Legalization.  But maybe anti-tax hysteria is peaking.  Conservative Republican Senator Tom Coburn says that anti-tax advocate of drowning the Federal Government in a bathtub Grover “Norquist is increasingly isolated politically.”  http://www.nytimes.com/2012/07/16/opinion/a-greater-american-pledge.html

 

A legible reprint of my poem (a euphemism) is at Repatriation to the Tune of “Revolution”  Here is part of the ending:  “Now if in your fantasy our Uncle Sam should drown, you don’t give a damn if your schemes bring the country down.  We ought to make you pay your tax.”

Thanks to the folks at Tax Analysts for printing this in Tax Notes of July 2, 2012, page 123-24.  A friend who read a draft told me to forget submitting it to the Kenyon Review.