A Value Added Tax can be regressive, so it needs to be combined with progressive measures.
The Federal income tax is supposed to be progressive, and often it is. But it has been often hijacked by the special interests to the point that it’s often palpably regressive. It treats income that hedge fund guys earn for the work of managing investments as low-taxed capital gain and not high-taxed ordinary income. The Senate can’t summon the will to call that income by its right name. http://www.newyorker.com/talk/financial/2010/03/15/100315ta_talk_surowiecki.
This issue is easy; see http://www.theconglomerate.org/2007/07/index.html. And the Government needs the money.
http://www.philly.com/inquirer/home_top_stories/20100304_Nutter_proposes_2-cent-per-ounce_sweet-drink_tax.html has this:
“Mayor Nutter [of Philadelphia] wants to treat the city’s weight and wallet problems in his 2010-11 budget with the same remedy: the nation’s highest tax on all sweetened beverages including soda, energy drinks, ice tea, even chocolate milk. . . .
“The tax rate would be 2 cents per ounce, 40 cents on a 20-ounce bottle of soda. The levy would cover fountain-drink syrups and powders, based on the number of liquid ounces they produce. Diet drinks without added sugar and baby formula would be excluded.
“City officials said they could raise $77 million a year.”
I’m quick to say let’s tax sodas. And donuts and candy bars. (A friend says I make Marie Antoinette look compassionate: “Don’t let them eat cake.”)
A soda tax would be regressive, but maybe not so regressive as the payroll tax.
Diet sodas are trickier. I have a hunch that it’s not nice to fool Mother Nature, and that diet sodas, like margarine with its transfats, will turn out to be bad for you. And “some studies suggest that drinking soda of any type leads to obesity and other health problems.” http://www.mayoclinic.com/health/diet-soda/AN01732
Setting up vending machines, some of which sell not just sweet and diet sodas but also water, to have two different prices, opponents will say, is just more than they can handle. Sometimes I can’t get my computer to work, but I don’t think that programming task is beyond corporate America.
But I’m nervous about caffeinated cola drinks and that Tea Party in Boston Harbour, as we might still spell it if the British hadn’t overtaxed. Was it just the high-handedness of the British, or was there some problem with folks needing caffeine?
Mr. Rangel is no paragon, and he should have acted and known better, but he was straight enough, when he became ranking Democrat and then Chairman of the Committee on Ways and Means, to keep at the top of the Committee staff two of the ablest and most dedicated public servants I knew when I worked on Capitol Hill, Janice Mays and John Buckley.
The joint Judiciary Committee of the Commonwealth of Massachusetts let me speak March 2, 2010 at its hearing on S1801, An Act to Tax and Regulate the Cannabis Industry, in the Statehouse in Boston. Chairman Eugene O’Flaherty and the Committee were respectful to all.
Here’s what I said, more or less:
Mr. Chairman and Members of the Committee,
Thank you for your patience. My name is Pat Oglesby. I’m a lawyer and founder of a nonprofit organization, the Center for the Examination of New Taxes, based in North Carolina. On an airplane next to someone who talks too much, who won’t shut up, mentioning our website, newtaxes.org/, is a . . . conversation . . . stopper.
Tax marijuana? Or let criminals get richer? I’m not arguing legalization, but the power to tax is the power to discourage, and if you are mad at marijuana, you can tax the heck out of it if you start with S 1801 and consider ten tighteners.
S 1801 does many things right: here are three.
- Its tax starts high, with extra tax on potency. I’m not advocating cheaper marijuana. John Prine sang about the price: “You may see me tonight with an illegal smile. It don’t cost very much, but it lasts a long while.” If you permit pot puffers to partake in peace, they’ll pay plenty.
- It does not exempt medical marijuana from tax. We can treat marijuana like Penicillin or like Pabst Blue Ribbon, but not like both, without a lot of fussing [about who’s sick and who’s faking].
- The bill allows changes in the tax rate so as to fight bootlegging. The alcohol bootlegger had the dignified image during Prohibition of mighty, respected kingpin. Now he’s a toothless backwoodsman sneaking around in the dark. Repeal of marijuana Prohibition can take away the drug lords’ mystique along with their money.
Ten possible tighteners would make the tax more bulletproof.
- Index for inflation.
- Add an alternative minimum tax based on retail price, as Europe does with tobacco.
- Start small with a pilot program in an eager City or Town, with all revenue coming to the
- Auction off licenses for producers and distributors.
- Don’t worry about protecting hemp.
- Charge consumers for a license like a hunting license. Maybe base the fee on income.
- Allow sale of only items that bootleggers can’t copy: maybe in cigarette paper that’s hard to counterfeit, or with genetic markers like the big seed companies use.
- Limit the exemption for home grown.
- Delay the effective date until the Federal Government winks, as it has with medical marijuana.
- Add a sunset date.
Tax marijuana? Or let criminals get richer? Why not tax the heck of it? Thank you. God bless the Commonwealth of Massachusetts.
In writing about new taxes, I’m liable to head straight for the capillaries, but real money is available from at least three sources:
1. A Value Added Tax
2. A carbon tax or an energy tax — instead of cap and trade
3. Adoption of worldwide unitary apportionment for the income of multinationals