Marijuana tax touted as budgetary benefit to US and states. Really?

Marijuana tax could be a new source of revenue for strapped states, and the federal government, too, say two congressmen who have proposed such legislation. But the scale of any tax benefit is hotly disputed.

By Allison Terry,?Correspondent / March 29, 2013

A grow house in Denver shows a marijuana plant ready to be harvested, in January. Rep. Jared Polis (D) of Colorado, who introduced the Ending Federal Marijuana Prohibition Act last month, told Politico Thursday that his state could see as much as $100 million a year from a federal marijuana tax.

Ed Andrieski/AP

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A federal marijuana tax could potentially pump millions of dollars into struggling state economies, say two US congressmen who have introduced legislation that would create such a tax and also protect state regulation policies.

Skip to next paragraph Allison Terry

Allison Terry works on national news desk for the Christian Science Monitor. She previously worked on the cover page desk and contributes to the culture section of the Monitor.

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Rep. Jared Polis (D) of Colorado, who introduced the Ending Federal Marijuana Prohibition Act last month, told Politico Thursday that his state could see as much as $100 million a year from a federal marijuana tax, which could make a ?substantial dent in needed school improvements, particularly in poorer districts.?

Representative Polis joins fellow Democratic Rep. Earl Blumenauer of Oregon, who has introduced the Marijuana Tax Equity Act, which would create a $50 excise tax on each ounce of marijuana sold.?

The two bills would help balance the federal and state budgets, the congressmen say, by reducing how much the Drug Enforcement Agency spends on fighting the war on drugs and also adding revenue that would help reduce the budget deficit.

?It is billions of dollars we spend to arrest [660,000] people a year for something that half of Americans think should be legal,? Representative Blumenauer told Fox News last month. He said the legislation would result in about $100 billion in savings and new revenue over the next decade.

But there's disagreement among policymakers and economists about just how much revenue a federal marijuana tax would raise.

If marijuana were taxed in the same way as alcohol and tobacco, estimates for new tax revenue would be closer to $6.4 billion ? $4.3 billion for federal coffers and $2.1 billion for the states ? not the hundreds of millions others have estimated, Harvard economics professor Jeffrey Miron, a scholar at the libertarian Cato Institute, told Politico Thursday.?

?This is not a cash cow that can solve anyone?s fiscal problems,? Mr. Miron said. ?There is a lot of exaggeration about how big the revenue can be.?

Another factor is that nationwide legalization would reduce the cost of marijuana, noted?Rosalie Liccardo Pacula of the RAND Drug Policy Research Center, according to the Politico report. She expects prices in Colorado and Washington, where voters last fall opted to legalize possession, to drop by 70 to 85 percent ? and thus the value of any taxes levied on marijuana consumption would also drop.

Claims that legalizing marijuana would benefit states and the US economy are not new.

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/PFzM1E0TsAs/Marijuana-tax-touted-as-budgetary-benefit-to-US-and-states.-Really

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