(And it’s led to horrible policies such as intrusive money-laundering laws and Orwellian asset-forfeiture laws).Posted on 02/14/2015 7:49:46 AM PST by Kaslin
Regular readers know that I don’t approve of drug use, but that I also favor legalization because the Drug War has been a costly and ineffective failure.
(And it’s led to horrible policies such as intrusive money-laundering laws and Orwellian asset-forfeiture laws).
So I was happy when folks in Colorado voted to decriminalize marijuana use, even if part of me didn’t like the idea that politicians would gain a new source of tax revenue.
If nothing else, what’s happening in Colorado (and Washington state) will be an interesting social experiment.
And even though we only have a modest bit of data, I’m going to be bold and assert that we can already learn two lessons from what’s happened.
1. Politicians are so greedy that they set taxes too high.
In the real world, there’s this thing called the Laffer Curve. And what it shows is that excessive tax rates don’t generate big piles of tax revenue because people change their behavior.
I’ve made this point before when dealing with personal income tax rates, corporate tax rates, capital gains taxes, and tobacco taxes.
Simply stated, the political class is so anxious to get more of our money that they impose punitive tax rates that fail to generate the desired amount of revenue.
And it’s also true with taxes on marijuana.
But don’t believe me. Let’s look at some news sources about what’s happened in Colorado.
Here are some excerpts from a Daily Beast report.
According to the Colorado Department of Revenue, the state collected $44 million in taxes from recreational marijuana in 2014, $25 million less than predicted. …why did recreational marijuana sales in Colorado fall short? …Coloradoans bought less recreational marijuana than they could have… Looking at the taxes on cannabis in the state, it’s not hard to see why. Pot taxes in Colorado are steep. In Denver, for example, an eighth of cannabis can come with four taxes: an excise tax, regular sales tax, special sales tax (for pot retailers), and a special city tax. That equals a markup of roughly 30 percent. …many pot aficionados looked at the numbers and decided to stick with their medical marijuana programs or their other dealers.
Here’s some similar analysis from a New York Times article.
Colorado’s tax results underscore a big conflict facing public officials considering marijuana legalization. Taxes should be kept low if the goal is to eliminate pot’s black market. …Colorado has also shown that pot-smokers don’t necessarily line up to leave the tax-free black market and pay hefty taxes. If medical pot is untaxed, or if pot can be grown at home and given away as in Colorado, the black market persists.
And here are some passages from the Mic’s analysis.
David Huff…from Aurora, told the AP that the state’s taxes on marijuana, which increase the price of pot by 30 percent or more, are too, um, high. “I don’t care if they write me a check, or refund it in my taxes, or just give me a free joint next time I come in. The taxes are too high, and they should give it back,” Huff said. …only 60 percent of Coloradans obtained their marijuana through a legal exchange in 2014. Some buyers are using the state’s legal medical marijuana, which is untaxed, as a source for green, while others take advantage of Amendment 64’s provision allowing the personal use of as many as six marijuana plants. The products of those plants have flooded the black market, depriving Colorado of more taxable pot.
The bottom line is that politicians better figure out how to limit their greed if they truly want the legal market to function properly.
2. A spending cap ensures that new revenue won’t finance bigger government.
I’m a big fan of restraining the growth of government. Needless to say, this means I don’t like giving politicians 
new sources of revenue.
That’s my view on all of the proposals for new revenue that are percolating in the corridors of power, including energy taxes, financial taxes, value-added taxes, and wealth taxes.
But if there’s actually some sort of binding limit on the growth of government, then politicians can’t use new revenue to finance a more bloated public sector.
And thanks to the nation’s best expenditure limit, that’s the case in Colorado.
Here’s what Mic wrote on the topic.
Colorado’s state constitution limits how much tax money the state treasury can receive before having to return it to taxpayers. The provision, known as the Taxpayer Bill of Rights, or TABOR… Since Colorado’s economy has been growing as a faster rate than expected, the state underestimated its total revenue, which means Centennial State residents may soon get a cut of the estimated $50 million in taxes collected from the sale of recreational marijuana during its first year of legalization. …TABOR, passed in 1992, dictates that Colorado can’t spend revenue made from taxation if those revenues grow faster than the rate of inflation and population growth. That money, known as a TABOR bonus, must be refunded to taxpayers unless voters approve a revenue change. This amendment has netted Colorado taxpayers about $3.3 billion since 1992.
Let’s return to the Daily Beast story.
In a state with one of the strictest tax and expenditure limitations in the country, Colorado operates under a Taxpayer Bill of Rights called TABOR. According to the bill, refunds are to be considered when state tax revenues don’t match up to the state estimates. This year, owing to a slight rise in the economy, the overall revenue was higher.
Though you won’t be surprised to learn that politicians want to figure out a way of spending the money. Check out these passages from the aforementioned piece in the New York Times.
Colorado will likely have to return to voters to ask to keep the pot tax money. That’s because of a 1992 amendment to the state constitution that restricts government spending. The amendment requires new voter-approved taxes, such as the pot taxes, to be refunded if overall state tax collections rise faster than permitted. Lawmakers from both parties are expected to vote this spring on a proposed ballot measure asking Coloradans to let the state keep pot taxes.
So both Republicans and Democrats will join hands in an effort to spend the money.
Gee, knock me over with a feather. What a surprise!
But let’s not focus on whether politicians want more of our money. Let’s learn from TABOR.
What it teaches us is that you get better policy when you limit the growth of government spending. And the closest thing we have to TABOR at the 
national level is the Swiss Debt Brake.
It’s worked very well in Switzerland because it puts the focus on the underlying problem of too much government. Notwithstanding the name, it limits the annual growth of spending, not the growth of debt.
The moral of the story is that when you address the real problem of too much spending, you automatically address the symptom of red ink.
And politicians presumably won’t have much incentive to impose higher taxes if they can’t use the money to buy votes with bigger government, so it’s a win-win situation!
P.S. Though there are some who favor higher taxes solely for reasons of spite and envy.
It’s Bush’s fault.
1st) We really have no “WAR ON DRUGS”. What we have is at best a big joke being played on us by these politicians, at worst, another “FEEL GOOD” law that means absolutely nothing. Now, the City State of Singapore and the country of Malaysia has a real “WAR ON DRUGS”. There is a death penalty for drug dealing, or even the use of drugs. Because they saw what unlimited “FORBIDDEN” drug use has done to China. When SINGAPORE became a country, in 1960, they had a big problem with opium addiction. What they did was arrest every opium addict they could find and put them in a hotel in the city. They were supplied with as much opium they wanted. Nothing else. No food or water. Within a month, opium addiction was eliminated. Then they put a death penalty on ALL elicit drug use or sale. Now, whenever a druggie needs a hit, they sniff cow shit for their high. It’s not forbidden to sniff cow shit. Now that is what I call a “WAR ON DRUGS”
And here once again is that widespread and oft repeated Libertarian Lie.
Compared to what? Is the war on murder a failure because we still have murders?
All these people who say it's a failure have no idea what the opposite arc of history would have been. They are putting forth the idea that since they don't like the results on this side of the fence, the other side of the fence must therefore be better.
Well it's not, but this won't stop Libertarians from deliberately misleading the public about what a Nation without a drug war would look like. They seem to think that addiction will defy the law of gravity, and that when we just stop pushing it back, it will hang their in midair with nothing holding it up.
Just like Liberals, they have a social engineering theory, and they want to try it out on the rest of us.
If we aren't seeing dead enemy soldiers, then it's not a war.
I'll believe it's a war when they can point to the bodies of drug traffickers.
Liberals try to avoid paying taxes? Say it ain't so!
Oh you can bet they do. They do like taxes as long as they get them out of others. That is why they are nothing but disgusting hypocrites
If we ever had made a dent in drugs coming into the US....the prices of drugs would have gone up rapidly. Zero effect. So the ‘war’ is bogus and simply a pot of money used for fake law enforcement and corrupt Latin American governments. The sooner we cut off the pot of money and admit this....the better off we will be.
Your argument is a non sequitur. None of your conclusions follow from your assumptions.
We *KNOW* what happens to the drug supply when a nation doesn't fight a war on drugs. It has happened in the past, and we have ACTUAL DATA that shows what happens.
This is what happens.
Notice those numbers are in *TONS*, and they don't even take into account the tons of Domestically grown opium that China was producing to break the opium market stranglehold that the British had on them.
That chart also does not take into account the tons of Opium that Japanese growers were shipping into China.
What happened to China? It collapsed. It got invaded. It was eventually taken over by a Dictator.
Why did these things happen? Because drug addiction had so badly wrecked the economy and the society that it was unable to prevent any of these bad consequences.
And you think we should give their plan a try? What, are you on drugs or something?
Cruel and unusual.... You’d have made a good Nazi.
No, the people in the east, yep the ASIANS, have had a very bad experience with illicit drugs. Starting with the British government importing OPIUM from India in the 1600’s. It took almost 400 years to collapse China, but it collapsed. The damage that illicit drugs can do to a country is immense. Pretty soon, there’ll be a movement to legalize all illicit drugs, maybe to tax them also. That there is illicit drugs in this country, yep. But please don’t call the government’s efforts to stamp it out a “WAR ON DRUGS”
Is China a good model to predict what would happen here, based on cultural differences? One would have been a large peasant class with no upward mobility and especially no Christian values.
Every time a stoner says “Legalize it, then tax the hell out of it, man.” I know they’ve never heard of the Laffer Curve. Unfortunately it would go over their heads, except for those successful lawyer and accountant smokers I always hear about but have never met.
Thank you. My point exactly.
Those people who think the same thing couldn't happen to us are either arrogant or ignorant, and they either need to get some humility or some knowledge.
Legalized drugs will wreck a nation, though I suspect ours is already a long ways along the path towards wreckage. We are running on fake money even now.
From my perspective, asking if "cultural differences" will change the outcome of drugs on the populace is like asking if "cultural differences" will change the effects of anesthesia on a populace.
The issue is biochemistry, not customs and habits. You allow people to get access to addictive drugs, and they will use them. There will always be "pushers" to push them, and even now our legal drugs have pharmaceutical companies taking out television adds promoting their product.
So in a word "No." I don't think cultural differences will have any effect on the rampage of addictive drugs through a populace that allows them into their society.
One would have been a large peasant class with no upward mobility and especially no Christian values.
I have personally known a lot of drug addicts from a Christian background. That didn't stop them from becoming addicts. As barriers come down, the culture moves in that direction. Note the far greater support for homosexuality/gay "Marriage" than their used to be.
Christian culture is weakening, and I fear we shall soon see the horrors of what takes it's place.
Getting tough doesn't always work - it hasn't for Indonesia or Iran. And then there's the little matter of making the punishment proportionate to the crime.
Addiction experts say differently:
“Genetic factors account for about half of the likelihood that an individual will develop addiction. Environmental factors interact with the person’s biology and affect the extent to which genetic factors exert their influence. Resiliencies the individual acquires (through parenting or later life experiences) can affect the extent to which genetic predispositions lead to the behavioral and other manifestations of addiction. Culture also plays a role in how addiction becomes actualized in persons with biological vulnerabilities to the development of addiction.” - American Society of Addiction Medicine
Those people in Singapore and Malaysia realize that illicit drugs in a country is a “CANCER”. The quicker you cut it out of the body, the less pain there will be. The longer you let it fester, the harder the cure will be.
______________________________________________________________
The abuse of illicit drugs remains a serious problem in Malaysia. Over the decade there has been a drastic increase in illegal drugs used.
-snip-
Hence the potential numbers of addicts in Malaysia is quite staggering, a possible one million addicts in our country of 25 million, or 4% of the populace!
http://www.psychiatry-malaysia.org/article.php?aid=90
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