Here’s a new edition of my “you be the judge” series.
These are posts designed to explore some of the more challenging aspects of a pro-libertarian philosophy.
Today’s example comes from Colorado, which had displayed a libertarian streak on issues ranging from school choice to drug legalization.
But the latter issue is the source of today’s quandary. Should marijuana be legal if it means more tax revenue that will be used by the political elite to expand the burden of government spending?
Here are the details from the Denver CBS station.
A draft bill floating around the Capitol late this week suggests that a new ballot question on pot taxes should repeal recreational pot in the state constitution if voters don’t approve 15 percent excise taxes on retail pot and a new 15 percent marijuana sales tax. Those would be in addition to regular state and local sales taxes. …Marijuana activists immediately blasted the proposal as a backhanded effort to repeal the pot vote, in which 55 percent of Coloradans chose to flout federal drug law and declare pot legal in small amounts for adults over 21.
If my math is correct, the politicians want a 30 percent special tax on marijuana, which is on top of the regular taxes that would be imposed.
That would be fine with me – if the proposal specified that the additional tax revenue was offset by a tax cut of equal size.
But as I explained in my “starve-the-beast” post, higher taxes usually finance bigger government.
Indeed, some politicians openly admit that they want the new revenue to expand the budget.
Sen. Larry Crowder, R-Alamosa, said the whole purpose of legalizing recreational marijuana was to raise money for education and other programs. “So if there’s no money, we shouldn’t have marijuana,” Crowder said. …In Washington state, the only other place where voters last year approved recreational pot, the ballot measure set taxes at 75 percent, settling the question. Both states are still waiting to find out whether the federal government plans to sue to block retail sales of the drug, set to begin next year.
Though I didn’t realize that the state of Washington imposes a 75 percent tax on marijuana. How…um…French!
More Money for Government? The Ultimate Buzz Kill
So what’s the bottom line? If I lived in Colorado, would I vote to keep pot legal even if it meant more money from the buffoons in the state capital?
Since drug legalization is about 990 out of 1000 in my list of priorities, I’m tempted to say no.
On the other hand, it would be nice to reduce the onerous burden of the War on Drugs, which has been used an excuse to expand the size and scope of government.
What do you think?
P.S. If you want more examples of “you be the judge,” previous editions are listed below.
- Is fleeing to Cuba a justifiable way to keep your children away from government control?
- Is it appropriate to put politicians on trial for economic malfeasance?
- Is it excessive vigilante justice to set your daughter’s rapist on fire?
- Should prisoners with AIDS be segregated from other convicts?
- Which tax collection tactic is more brutal and unjust?
- When a wheelchair-bound guy uses a baseball bat to punish his granddaughter’s molester, what’s the right response?
- Should politicians set pay levels at government-owned firms?
- Is sharia law sometimes appropriate?
- Is the Netherlands right to segregate troublemakers from the general population?
- What do you do about self-destructive behavior in a government-run healthcare system?
- Should there be laws against incest among consenting adults?
- Should motorists be allowed to warn other drivers about speed traps?
- Is jury nullification the right approach for victimless crimes?
- Was this angry father wrong to take matters into his own hands?
- Should drunk-rafting be a crime?
- Should rich people pay higher speeding fines?
International Liberty 
[…] P.S. The one downside to legalization is that politicians get a new source of tax revenue. […]
[…] least one libertarian (ahem, me) explicitly pointed out that generating additional tax revenue was actually an argument against legalization (I included this issue in my collection of Libertarian […]
[…] almost tempted to say we’d be better off if marijuana was criminalized so it could be sold on the black market […]
[…] P.S. The one downside to legalization is that politicians get a new source of tax revenue. […]
[…] P.S. The one downside to legalization is that politicians get a new source of tax revenue. […]
[…] see dollar signs. They want to tax marijuana consumption to they can have more money to spend (I half-joked that this was a reason to keep it illegal, but that’s a separate […]
[…] though I’m a social conservative-style teetotaler, I agree with the pot legalization. But I have mixed feelings because I don’t want politicians to get more money to […]
[…] though I’m a social conservative-style teetotaler, I agree with the pot legalization. But I have mixed feelings because I don’t want politicians to get more money to […]
[…] I don’t like the fact that politicians see legalization mostly as an opportunity to generate additional tax […]
[…] I even wondered if legalization in Colorado was a good thing if the net result was a big pile of tax revenue that […]
[…] I even wondered if legalization in Colorado was a good thing if the net result was a big pile of tax revenue that […]
[…] I even wondered if legalization in Colorado was a good thing if the net result was a big pile of tax revenue that […]
[…] The Good – The biggest slam-dunk of the night was the overwhelming 80-20 rejection of single-payer health care in Colorado. Voters in the state also rejected a tax hike on tobacco. A pro-gun control initiative in Maine is narrowly failing. In other news, a sales tax increase was defeated in Oklahoma, as was the gross receipts tax in Oregon and the carbon tax in Washington. Also, lots of state legalized pot (although voting to tax it as well). […]
[…] will have an opportunity to fully or partly legalize marijuana. These initiatives also include buzz-kill provisions to levy hefty taxes on producers and […]
[…] will have an opportunity to fully or partly legalize marijuana. These initiatives also include buzz-kill provisions to levy hefty taxes on producers and […]
This is where Libertarians fall short.
They still want a government, they just want to be in charge…just like the Democrats and Republicans.
The ancap answer is to stand firm on the NAP and decriminalize drugs.
#VotingIsViolence
[…] I’m so libertarian I even worry that legalized drugs will even have bad fiscal policy effects since governments will figure out how […]
[…] factor when grading a policy proposal. I fretted, for instance, that pot legalization in Colorado would be a mixed blessing because it would generate more tax revenue. But thanks to Colorado’s Taxpayer Bill of Rights, […]
[…] 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 […]
[…] asked, for instance, whether libertarians might have second thoughts about an end to drug prohibition if the result was bigger […]
[…] asked, for instance, whether libertarians might have second thoughts about an end to drug prohibition if the result was bigger […]
[…] Though I’ve been lax in this regard since my last iteration in the series was about drug legalization back in April. […]
[…] creates a bit of a quandary if you believe in freedom and small […]
[…] And the joke about taxing marijuana reminds me of what I wrote about the downside to legalization. […]
[…] “millions of dollars in annual tax revenue” rubs me the wrong way, as I explained in a recent post about marijuana legalization in Colorado, but even an anti-taxer like myself recognizes that ending a form of prohibition is a net plus for […]
Alcohol is considered a drug and it’s legal … Marijuana should be legalized and taxed – like alcohol and tobacco – and spending cuts to agencies like the DEA, ICE, Border Patrol and any other agency linked to the “drug war” should be made through reduced taxation … An aside: this means that BATFE would become BATFEM … sounds like some sort of sexy superheroine …
The question wasn’t a choice between some taxes and no taxes. Rather it was a question whether additional, and rather draconian, taxes ought to be added to the already existing taxes.
Hmm, this seems like an odd question. The government taxes all sorts of things. If freedom-loving people were to say that we would be better off for something to be illegal than for the government to collect taxes from it, then the only possible options are to either eliminate all taxes or ban all economic activity. Neither option seems realistic.
Seems like a no-brainer for the targeting principle in tax policy. If the revenues from sales go to mitigating externalities, funding law enforcement and treatment, then it could be relatively more efficient. Maybe police budgets should come out of alcohol excise taxes as well. It goes a lot further in balancing the incentives of the oppressor with the preferences of the oppressed.
Richard Nixon’s war on drugs has been going since the 1970’s… and today… in any community anywhere in America… a savvy 14 year old child with fifty dollars in his or her pocket can buy an astonishing array of narcotics on the black market… that after over 40 years of prohibition… billions spent on enforcement efforts… and countless lives ruined… from both the drugs and drug enforcement efforts… we have created a new class of criminal enterprise with seemingly unlimited resources… and the ability to penetrate every community in this nation… at some point we will have to come to terms with the fact that prohibition just does not work… never has… never will… that said… the legalization of pot is the first step in the gradual decriminalization of recreational drugs… democrat and republicans politicians will likely do what they can to exert control over initiatives… taxing pot is one way to do that… if the drug is taxed… the revenue should be used to educate the population on the dangers of addiction… and to fund private treatment programs for recovering addicts… not a perfect solution… but we do not live in a perfect world… far from it…
I have frequent discussions with my son about pot. He always makes the same point, if you take everything in out country pot, coffee, tobacco, other drugs, sugar, hammers, drunk drivers, guns and so on. We would not have the same list on legal and illegal items we have today. Something being good or bad society has nothing to do with whether it is legal or not. We tax everything, look at the tax on gas or a pack of cigarettes. Why is pot so different? The problem with all taxes if how do we keep the government from just wasting the money?
Another thing that puzzles me over “legalization” is that consumption is being legalized without, seems to me at least, legalizing production to the same extent. That will increase demand without an equal ability to increase supply. So I wonder if the “criminal” aspect of the trade will not intensify, rather than subside. There may actually be a further distortion of equilibrium towards more criminality, until production is equally legalized.
A preference would have to be based on a quantitative analysis and I admit that I have neither the time nor the mental capacity to make a quantitative evaluation of which option would be better/worse. Yes to 30% tax Colorado but no to 75% Washington is also a valid option.
I am leaning slightly towards the allow and tax option because, given the fact that Washington and Colorado are the only two states considering such measures, this would at least provide some diversification, experimentation and cultural variety between states. The “don’t allow don’t tax” approach leaves us with prohibition uniformity throughout the fifty states.
Am I worried about bigger government? Of course. I am particularly worried that the tax revenue will finance not only bigger government in general, but specifically propaganda (perhaps through the educational system) as to why we need even bigger mandatory participation into collectivist schemes supported by majority. The “debate-vote-impose” uniformity process will greatly accelerate the decline of our prosperity as citizens of a once privileged western world. As “occupy” protesters will find out, it is one thing to idealistically preach worldwide equality, it is quite another to put your privileged prosperity where your mouth is and live through convergence to the worldwide average.
Perhaps the new pot tax will be used to finance coffee stamps at Starbucks, a place where liberals wired on caffeine will contemplate further persecution measures against nicotine and sugary non-coffee drinks.
Also, one has to keep reminding that while the inherent interests of those whose livelihood depends on mandatory collectivism (politicians) have developed the predictable ability to foist upon voters more collectivism than voters have asked for, it is still voters who control the process — and ultimately ask for the mandatory collectivism. Perhaps there needs to be a slogan “it’s the voters stupid”. But nobody gets anywhere politically or intellectually by insulting voters. Even think tanks have to tread very very cautiously in their rare, subtle and limited criticisms of voters — lest they be marginalized. That option and satisfaction — telling voter lemmings how stupid they are — is limited to anonymous bloggers and commenters, like Zorba!
Although I think they should have passed a better ballot measure without taxes®ulations (libertarians objected to the measure), it seems this is better than the status quo.
Users at least now have the choice to either continue to use a black market, or to buy legally and pay the tax. i don’t know if the restrictions of this bill are onerous enough that a black market will continue to exist, but I suspect entrepreneurs may fear being picked up under federal law so the legal market will be limited and there will still be a black market.
Although I object to the imposition of taxes, at least this provides an example to the public of trying to roll back victimless crimes which makes it a net positive. If anything the high level of taxes may lead some non-libertarians to question whether other taxes may be too high. I have no desire for recreational drugs so the drug war issue isn’t of personal selfish interest, but it seems there are some positive lessons it may teach others about getting government out of areas it doesn’t belong, and the difficulty of getting politicians to truly let people be free even when the public votes for it. Obviously of course it defeats part of the purpose of this if taxes help encourage the the black market to continue (though the claims are this will leave the price lower than the black market, but we will see).
Legalize it, the police have better things to do, and the jails are out of room. The government shouldn’t legislate what is basically a moral issue. Better to ban tobacco which fills the hospitals and costs the Insurance industry, and the state (with Obama care) millions if not billions.
If you tax it excessively. the criminal element will still be there, albeit charging a little less.
The focus should be on removing the current high cost to society, not on trying to make more tax money.
I am a Colorado resident, and I will vote to repeal the marijuana legalization law if it means an expansion of State government scope and power.
There are enormous numbers of government employees engaged in the War on Drugs, along with an enormous numbers of incarcerated criminals guilty of a victim-less crime. Eliminating these should produce enormous savings… So why increase taxes?
But let me address the question. Yes, severely taxing behavior governments think is reprehensible (such as smoking pot, as well as earning over a million dollars a year) is better than banning it outright. Yet I can’t see how smoking pot fits into the enumerated powers, which means it’s a matter for individual states not the feds. Then they can compete on this front as well…
It seems to be a lose-lose situation. If it is legalized the government is unlikely to raise the amounts they greedily anticipate with their huge tax rates. Some people may change their habits and stop buying marijuana, but more likely it will create a lucrative black market similar to life with illegal marijuana now. Either way you maintain an expensive bureaucracy to enforce these silly laws.
Should every liberty that results in tax revenue be outlawed in order to starve government? This seems a nonsensical question to me.