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Anorak | Why California’s Financial Pain Will Lead To A Legal Tax On Marijuana

Why California’s Financial Pain Will Lead To A Legal Tax On Marijuana

by | 22nd, September 2010

CALIFORNIA is bust. There’s no money. Bruce Bartlett looks at what the financial state of affairs means for marijuana prohibition:

During the 1890s and the early part of the 20th century, there was a powerful national campaign to abolish smoking that was no less intense than the drive for Prohibition. A key reason the campaign ultimately fizzled out in the 1920s was the government’s need for tobacco tax revenues, especially after alcohol tax revenues dried up. The Republicans’ cuts in income taxes in the 1920s also increased the federal government’s dependence on tobacco tax revenues, which rose from 4 percent of federal receipts in 1920 to 11.2 percent in 1929. The onset of the Great Depression, the concomitant fall in income tax revenues, and the inelasticity of demand for cigarettes caused tobacco revenues to rise to 20.7 percent of all federal receipts by 1932.

In the end, revenue needs trumped sumptuary considerations in the cases of both alcohol and tobacco. This raises the interesting question of whether revenue considerations will drive reform of the laws against illegal drugs.



Posted: 22nd, September 2010 | In: Reviews Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink