Tag Archives: taxation

Smoking and Drinking

Have you ever wondered about the disparity in the way the law treats alcohol, tobacco and marijuana?

As any police officer will attest, a nasty drunk is far more dangerous than someone zoned out on “weed.” As the scientific literature will confirm, tobacco is many times more harmful than marijuana. Not only has the belief that marijuana is a “gateway drug” proved bogus, but for adults, it is less harmful than either smoking or excessive ingestion of alcohol. (No one has ever died of a marijuana overdose, although if your preferred method of indulging is brownies, I suppose the resulting obesity might get you.)

People with addictive personalities will abuse whatever is at hand–alcohol, drugs, even glue. Should we outlaw glue?

The history of America’s war on drugs is too labyrinthian and too racist to recount here, and there are plenty of books and articles on the subject if you are interested in the whole sordid story. Suffice it to say that our mindless war on weed has made the once-profitable cultivation of hemp illegal, prevented study of marijuana’s medicinal value, and not-so-incidentally ruined countless lives (mostly African-American; black people are almost four times more likely to be arrested for marijuana possession than whites, even though both groups use the drug at roughly the same rate.).

But attitudes are finally changing.

In 1969, according to the Pew Research Center, 84 percent of Americans thought the drug should be illegal; by 2015, that number had fallen to 44 percent.

After Colorado became the first state to legalize marijuana, policymakers began to seriously consider a number of issues–especially pot’s potential to generate tax revenue.

Legalization raises a number of questions with policy implications. For example, how can it be taxed? In 2015, Colorado raised $135 million in taxes and fees from legal sales. Another important question: Will states that stop arresting people for selling or having marijuana save money on policing and reduce their incarceration rates? Some 620,000 people were arrested for marijuana possession in 2014, according to the FBI; young minority men were disproportionately targeted. Will more children take to smoking weed? As laws relax and the stigma associated with marijuana recedes, people may use more.

A study from Australia suggests some answers to those questions. The authors looked at what consequences we might expect if marijuana were regulated like alcohol and sold to people above the age of 21. They extrapolated their analysis to include the United States, a country with similar cultural behaviors and economies. Here are some of their findings:

  • The U.S. could raise between $4 billion and $12 billion annually by taxing legal marijuana. These numbers are based on a tax levy of about 25 percent, which is what the state of Colorado charges.
  • When people have more access to marijuana (through legal and illegal means) more people use it.
  • Currently, 17 percent of Australians say they do not use cannabis for fear of legal repercussions; 90 percent of those say that access is not the reason.

Access is evidently not a problem for people in either country; several years ago, an American study found that teenagers in Maryland could obtain illegal marijuana (and other drugs) much more easily than they could obtain legal but regulated alcohol. Legalization and regulation similar to that currently in place for liquor stores would probably reduce today’s easy availability.

The authors determined that a tax rate of 25% wasn’t high enough to incentivize a black market. One of the (many) negative consequences of drug prohibition is the fact that it makes an illegal market profitable.

In the U.S., tobacco and alcohol interests have powerful lobbies, so those substances are legal even though they do far more harm than marijuana.

Just to be clear, I don’t advocate prohibition for any of these; we’ve seen how well that works. Substance abuse is a public health problem; it shouldn’t be a matter for the criminal justice system.

Wouldn’t it be nice if we based public policy on evidence and analysis, rather than moralism and money?

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Useful Fantasies

Yesterday, I noted with some alarm the fact-free nature of the GOP debate.

A recent report from the Brookings Institution offers a useful reminder that–inconvenient or not– facts really do matter, particularly when economic policy decisions must be made.

The dog days of August have given way to something much worse. Congress returned to session this week, and the rest of the year promises to be nightmarish. The House and Senate passed budget resolutions earlier this year calling for nearly $5 trillion in spending cuts by 2025. More than two-thirds of those cuts would come from programs that help people with low-and moderate-incomes. Health care spending would be halved. If such cuts are enacted, the president will likely veto them. At best, another partisan budget war will ensue after which the veto is sustained. At worst, the cuts become law.

The putative justification for these cuts is that the nation faces insupportable increases in public debt because of expanding budget deficits. Even if the projections were valid, it would be prudent to enact some tax increases in order to preserve needed public spending. But the projections of explosively growing debt are not valid. They are fantasy.

The remainder of the article–which is well worth reading in its entirety–explains that projections of deficits result from the use of “conventions” (assumptions) that do not reflect current reality, and are evidently not intended to do so.

I do not pretend to understand the utility of these conventions for budgetary purposes, but   to the extent they produce “projections” that do not reflect reality, their use as ammunition in the effort to reduce government to a size that can be “drowned in a bathtub”–to use Grover Norquist’s phrase–is pernicious.

But what if we did face persistent deficits?

The assumption seems to be that the only avenue open to policymakers would be budget cuts. It’s as if we have taken tax increases off the table–despite the fact that America’s tax rates are historically low, America’s wealthiest enjoy a wide range of unconscionable tax loopholes, and America’s most profitable corporations continue to evade taxes by parking their profits offshore.

I don’t understand the dogged determination of the “morality party” to ignore the facts in order to protect the perquisites of the already advantaged at the expense of those who have little or nothing.

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In the Eye of the Beholder

Someone posted a comment to one of my previous blogs to the effect that taxation is theft. This is a not-uncommon complaint of the far right–that government is using its coercive power to steal the fruits of honest labor from its citizens.

I see a different picture. I see whiners who want to steal from their fellow-citizens–people who accept and use the services provided by government with our tax dollars, but who are indignant at the notion that they should pay their fair share for those services. They drive on streets paved with tax dollars, call on police when assaulted, employ workers educated in our public schools, put their garbage out for pickup, are protected by the National Guard and armed forces…No matter how loudly they complain about “socialism,”  I know of none who refuse to accept their Social Security and Medicare benefits.

Talk about your “makers” and “takers”…People who want the benefits of our public infrastructure but get indignant when asked to pay for those benefits sure seem to me to fall into the “takers” category.

The issue confronting thoughtful citizens is not “how do we avoid paying for what we get?” The issue is “how do we insure that government is operating efficiently and fairly, that it is doing those things that are properly its job and not others?” “How do we ensure that we are paying a fair price for services we really want government to provide?”

Of course, addressing those (much more complicated) questions, and monitoring our governing institutions takes effort and a modicum of civic understanding. Fixing those institutions when they are malfunctioning–or not functioning at all, which seems to be the case now–will require real effort. It’s easier to whine.

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