As the momentum for pot legalization continues to grow (Senator Charles Schumer of NY recently came out in favor, and Trump has been making good noises despite his Attorney General’s hard-ass-ed-nes), it’s worth taking a trip down memory lane – or at least my memory lane – as both illumination and caution.

Years back, when pot legalization was primarily the province of libertarians, I recall many an argument on the idea’s pros and cons with wavering prohibitionists of both the Left and the Right. As time went on, I found an increasing number of people formerly opposed who were starting to warm up to legalization and recognizing the futility and harm of prohibition.

It’s hard for people to give up on long-held beliefs, and as a result, many seek to hedge by adding conditions or justifications when they start adopting a new and uncomfortable idea. One such that I commonly witnessed was the “tax the hell out of it” adjunct to pot legalization. People who didn’t originally like pot being legalized put forth their version ofa compromise: that, if it were to be legal, then its users should pay society for the privilege.

Philosophically, this stands the idea of individual liberty on its head. If we are to accept that, as long as I do no one else harm, what I eat, drink, smoke, or otherwise put into my body is no one else’s business, then paying a punitive price for exercising that right in certain ways is unsupportable.

But, philosophy of liberty doesn’t sway many people, sad to say, and it’s often argued that “society” pays a price when individuals engage in supposed vices. Thus, it’s supposedly justifiable to heavily tax tobacco and alcohol, and to soak up as big a share of gambling revenues as the government can get away with (why, if it’s bad for society, does government monopolize and promote gambling, by the way?), and impose other “sin” taxes liberally. Encouraged by rapacious politicians, who see an opportunity to collect money currently being accreted by criminals, reluctant legalizers want newly-legal pot to be heavily taxed (and regulated), because they think that they need a revenue stream to offset societal costs that’ll be generated by stoners.

The numbers belie this idea, of course. Society suffers major costs due to prohibition of pot. The entire law enforcement apparatus, from the beat cop to the prosecutor’s office to the prison system, costs taxpayers huge piles of money. Arrest, prosecution, and conviction of pot users attaches life-long criminal records to them, harming their ability to get jobs and build careers, and costing society both the benefit of a lifetime’s better productivity and the larger tax revenue stream they’d have provided had they never been saddled with a record. Also lost are the jobs and tax base of legitimate businesses, since illegal pot obviously sold on the black-market and a chunk of the revenue stream flows out to foreign drug cartels (whose payroll includes many unsavory jobs).

Thus, the “tax the hell out of it” to pay for what it’ll cost is an argument against perfection, i.e. a comparison to a society where pot, legal or illegal, doesn’t exist, and is therefore specious and unserious. Worse, “tax the hell out of it” gets in the way of the benefits that legalization would provide.

Consider cigarettes. In many states, they are taxed at a relatively low rate – on a part with other consumer goods – but not so high as to take a large bite out of smokers’ wallets. In others, however, cigarette taxes are treated as a mechanism for behavioral change. States like New York want people to quit smoking, but don’t have either the will or the authority to ban tobacco, so they pile on huge taxes, taxes that exceed the price of the product itself. Naturally, the market responds, and, naturally, not in the way the taxers desire. A black market thrives in cigarettes in New York (and other high-tax states), with 60% of cigarettes sold in NY either untaxed (bootlegged from low-tax states) or counterfeit (manufactured in China and other foreign lands and smuggled in). Thus, government’s taxes create a black market where none should exist.

The same effect occurs when pot is too heavily taxed and regulated. The financial pressures that would tear down the black market and drug cartels – no criminal organization can compete on a legal product and level playing field with Corporate America (see: Las Vegas) – are counterweighed by the distortions that heavy taxation and regulation impose, and so black markets continue to function even in pot-legal states where the taxes are too high. Of course, the Federal government’s continued prohibition has something to do with that as well, since it keeps Corporate America at bay, but that obstacle (which hopefully will get resolved sooner rather than later) is a matter apart from “tax the hell out of it,” as the example of high-tax cigarettes shows.

If you’re in the “tax the hell out of it” crowd, take a moment and ask yourself why. Be honest. Do you really think that legal pot will cost society more than illegal pot does? If so, do you think that heavy taxation and regulation will work to address that cost? Or, do you simply dislike pot and stoners, and want them punished for engaging in a behavior you disapprove?

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.


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