Sunday, June 13, 2010

Tax benefits of legalizing marijuana -- a history lesson?

Daniel Okrent, the author of Last Call, a new book on alcohol Prohibition, writes in the Week in Review in The New York Times, on June 13, 2010, about the 1920s arguments of business leaders to repeal Prohibition in order to tax alcohol in order to end the relatively new income tax.

Okrent's history is fascinating, but his reporting is seriously flawed. He lazily lays out a specious claim and then attacks supporters of the Tax and Regulate initiative as "indulging a fantasy of income tax relief emerging from a cloud of legalized marijuana smoke." Okrent does not identify anyone in California, or any supporter of the initiative, for making the kinds of extreme claim made on March 19, 1928 by Pierre S. DuPont about ending alcohol prohibition, "the revenue of the government would be increased sufficiently to warrant the abolition of the income tax and corporation tax." But Okrent acknowledged that in the first year of the repeal of alcohol prohibition, the federal taxation alone amounted to nine percent of total federal revenue!

He says some (anonymous) persons "even believe that a tax on marijuana, which could be legalized by California voters this November, could lead to a reduction in the state's income tax." What is so surprising about this shoddy piece is the Okrent served for three years as the Public Editor of The New York Times, charged with upholding the highest standards of journalism at The Times by flagging the failings of Times writers. One of those standards is to attribute ideas and claims. His current counterpart at The Washington Post, Ombudsman Andrew Alexander, for example, writes today in his column about this particular sin of journalism, anonymity.

It is with specious suggestion that the California Tax, Control and Regulate Initiative is attacked.

Of course the question of tax savings is raised, and it is an important issue with a wide range of estimates.

In the New York Times Freakonomics blog in May 2009, Harvard professor Jeffrey Miron suggests nationwide marijuana legalization revenues of about $7 billion if it were taxed at rates similar to those of alcohol or tobacco.

Paul Armentano, in that blog, cites Dr. Jon Gettman's estimate of $31 billion in revenues, and a California revenue agency's estimate of $1.3 billion annually.

No one who knows the size of government today is going to claim that the tax on marijuana is going to enable the abolition of the income tax. Okrent's column is the crudest journalistic sleight of hand.

Sphere: Related Content

1 comment:

Anonymous said...

I foresee the grow-your-own policy (in the 2010taxcann act) causing a major drop in cannabis values, probably putting a lot of dispensaries under. Not everyone will grow at home, much it'll be much easier than home brewing.