Wednesday, September 19, 2012

States Try Fiscal Drag on Pot

Several western states are debating "how much tax money recreational marijuana laws could produce."

Weepin' Buddha on a recline! There may be solid reasons for states to legalize marijuana, but generating tax-revenue is NOT one of them. State taxes do not "produce" currency, they only redirect currency from private use to publicly targeted use. No net change in net financial assets, no net change in local incomes or population capabilities.

Look, the bottom line is mobilizing the capabilities of a local population. Why not institute a state tax that requires people to acquire "time-bank" hours? Better yet, allow people to pay some of their existing state taxes with those time-bank hours.   That way people could get together and propose useful projects where group A[i-j] could do something for members of group B[k-m], who would in turn provide a service that members of group A desired. That approach would actually "produce" a return on coordination, by encouraging people with otherwise idle or spare time to find locally useful things to do. Various forms of drug use by bored citizens might even decrease.

Instead, "pro-pot campaigners say it could prove a windfall for cash-strapped states with new taxes on pot and reduced criminal justice costs."

What part of sector flows don't these people understand? Unless out of state buyers flock in (redistributing currency from other states), all this will do is recycle existing currency assets in-state, and also remove additional aggregate demand, by increasing net taxes.

Their argument might be that significant pot-profits are smuggled out of state, and eventually to Wall St, but the variability, per state, of those assumptions are not even being accurately examined yet in this debate.

Spiraling down through a haze of smoke-tax, man! Like, whatever.

If any good comes from these efforts, it'll be entirely indirect, through reduced crime and other current intangibles.

On the plus side, if they stop spending so many resources prosecuting pot-smokers, maybe they can afford to ramp up prosecution of white-collar crime? If they instead simply spend less on in-state civic regulation, that decline in aggregate demand "spent into the economy" will tend to offset their imagined savings.

Can you play musical chairs while high on pot?

Could be comical.


MortgageAngel said...

This is an interesting take, Roger. However, I'm unconvinced. Since a state cannot create money it needs to figure out how to pay for stuff and a 420 tax would create revenue. Other benefits include lower price before tax because more suppliers and growers would enter the market. There's a percentage of the population that will light one up once it's legal thereby increasing demand. New businesses would emerge creating jobs to meet increased demand. Then again, hmmm just thought of this, less alcohol consumption, perhaps cigarettes too. There would be less use of prescription drugs, which are very expensive compared to cannabis. I wonder what Californians would do with the money they'd save!

As it turns out, money does grow on trees.

I'm in California and, as it turns out, money grows on trees. Removing prohibition

Anonymous said...

The savings on criminal prosecution and imprisonment alone make it worthwhile legalizing. Taxes are icing on the cake.

If they legalize common hemp as a farm crop while they're at it, the new industries that will permit should bring in more local revenue than the stuff people smoke.

Local time-banks are another excellent idea.

Roger Erickson said...

MA, Anon;

That's exactly my point. There are potential though poorly understood benefits ... but net currency creation from a tax windfall is NOT one of them.

Plus, there are plenty of additional options to explore. How on earth do you get people to explore their options?

Lori Franko said...

Group A ties the left shoe of group B, group B ties the right shoe of group C, Group D, unzips the zipper of group G, and Group F whips it out for them to pee.

Don't you see your problem, there is allready too much of one group doing for another, it is too complex and costly, some idiots over in warren moslers bowling alley are talking about score, but the bowling alley is overrun with idiots talking about useless crap. It is starting to stink, like urine. I went over to the football field to get some fresh air, and some fools over there are talking about score too, but I am laughing, because there are 50 teams down on the field, and 5000 fans down there too, all running back and forth and tackling each other and some ivory tower FOOL is talking about keeping score, not realizing that the 1% have come to the only conclusion that is reality, we must kick off 48 teams off the field, and those 5000 fans that have overrun us, before we can even BEGING to talk about proper scorekeeping, so YOU ARE FREAKING DOOMED! Us 1% want a nice clean bowling alley, and nice functional football field where proper scorekeeping can take place, not areas of chaos and overcrowding that have ruined everything. As I tried to navigate my superyacht into the Marina at St Croix, I hit warrens boat, and he said HOLY CRAP, this marina is too damn crowded, where are all these people coming from, we got to do something about this! Thus our plan was launched for 5 billion people to bite the dust. DOOMED I tell ya!