Marijuana stems & stalks that have been separated from the plant $0.40 for each gram or fraction thereof More than 42.5 gramsThere is a lot of great stuff in the above hyperlink, so do check it out. Now, to calculate the deadweight loss of these taxes, we would need to discount for the probability of being caught on each unit. It would be further interesting to calculate if these rates are revenue maximizing, that is, holding constant the probability of being caught, do the tax too much illegal activity to be revenue maximizing? How have the tax structures influenced the way the products have been produced? There is probably a dissertation here.
Marijuana other than separated stems and stalks $3.50 for each gram or fraction thereof More than 42.5 grams
Cocaine $50.00 for each gram or fraction thereof 7 or more grams
Any other controlled substance that is sold by weight $200.00 for each gram or fraction thereof 7 or more grams
Any other controlled substance that is not sold by weight $200.00 for each 10 dosage units or fraction thereof 10 dosage units
Any low-street-value drug that is not sold by weight $50.00 for each 10 dosage units or fraction thereof 10 dosage units
Illicit spirituous liquor sold by the drink $31.70 for each gallon or fraction thereof No minimum
Illicit spirituous liquor not sold by the drink $12.80 for each gallon or fraction thereof No minimum
Mash $1.28 per gallon or fraction thereof No minimum
Illicit mixed beverages $20.00 on each 4 liters and a proportional sum on lesser quantities No minimum
Here is a Table from Tennessee that shows that tax revenue on illegal substances swelled 80% from the previous fiscal year.
Hat Tip: Sarah Larson for both the link and the Table.
3 comments:
Wow, this is interesting.
I had no idea about this; do you think most residents do? If residents DON'T know about the tax, they don't adjust their behavior to avoid the tax. In that sense, there's no Laffer Curve-- it would be linear, at least ex ante to the first crime. They would (presumably) adjust after being caught...then it would be back to the same story.
If revenue maximization is the goal here, there's a tradeoff between severity of punishment (i.e., jail) and tax cost. Jail time could be minimized and tax rates increased to maximize revenue. If there were enough experimentation you could isolate the cost of avoiding a year in prison.
These are taxes as separate from fines, yes?
That's a good question, in this case it might matter if the tax is on producers rather than consumers for purpose of deadweight loss. It's not clear to me how it is distinguished by law.
It seems North Carolina had a state supreme court case that ruled that, functionally, the cocaine tax was a criminal fee and was therefore reduced. My guess is that for legal reasons they distinguish between taxes and criminal fees, but I don't know the consequences of this distinction.
Well, I do not really suppose this may work.
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