A sin tax is a form of excise tax levied on goods or activities that are widely perceived as harmful or immoral - e.g., alcohol, cigarettes, gambling, indoor tanning. The theory is that certain goods and activities impose costs on society that individuals do not consider before consuming harmful substances or engaging in harmful or immoral activities. By imposing a sin tax on these commodities, the government simultaneously discourages the objectionable behavior and generates tax revenue.
The Fraser Institute's Stephen Easton estimates total U.S. spending on marijuana at $45-$110 billion per year (a more precise figure is not attainable due to the illegal nature of this type of spending). Based on these figures, Easton estimates that a tax on recreational marijuana use could generate at least $40 billion annually.
Former DEA agent Robert Stutman counters Easton's revenue-generating argument by calling attention to the fiscal shortcomings of the current tax on alcohol. According to Stutman, for every dollar generated by the alcohol tax, the federal government must expend $9 to address alcohol-related consequences - e.g., Medicare and Medicaid treatment for alcohol-induced health problems and rehabilitation programs.
But while the alcohol tax is not a picture of efficiency, Stutman's attempt to analogize marijuana to alcohol is flawed. Specifically, he overlooks the minimal health consequences and proven health benefits of marijuana.
Unlike alcohol, which carries the risk of fatal overdose, no quantity of marijuana can cause a fatal overdose. Moreover, the adverse health effects associated with frequent and sustained marijuana use appear to be nominal. Indeed, as Paul Armentano and Paul Kuhn of the National Organization for the Reform of Marijuana Laws (NORML) explained in a recent article, there is no epidemiological evidence that marijuana users have shorter life expectancies or suffer higher incidences of cancer than non-users. To the contrary, respected medical practitioners have published scholarly articles in authoritative medical journals touting the medicinal value of marijuana to treat various medical conditions (e.g., glaucoma, depression, migraines, fibromyalgia, insomnia) and to help patients tolerate the effects of chemo therapy and degenerative terminal illnesses (e.g., AIDS, cancer). Indeed, the New England Journal of Medicine, one of the most esteemed journals of medicine, endorsed the medicinal use of marijuana as early as 1997.
Of course, marijuana use is not without risk. Frequent and prolonged use may lead to dependency. But this is also true of alcohol and tobacco, both of which are legal and both of which are more dangerous and more addicting than marijuana. In addition, there is the issue of driving under the influence of marijuana. But the same DUI laws that currently deter and punish drunk driving could easily be adapted to deter and punish incidences of driving under the influence of marijuana. A separate, but related, concern is that people would report to work under the influence of marijuana or smoke marijuana cigarettes during breaks. But the same workplace rules that currently prohibit employees from working while under the influence of alcohol could just as effectively regulate marijuana use as it relates to employment.
Still, a marijuana tax would not generate enough revenue to justify legalization solely on grounds of tax revenue. Although Easton's estimated $40 billion in annual tax revenue sounds substantial in the abstract, it is really inconsequential in the larger scheme of our national debt. Currently, the U.S. national debt is some $14.6 trillion. Therefore, $40 billion amounts to less than 1% of U.S. debt. In any event, even if a marijuana tax could significantly reduce the U.S. national debt, it would constitute unsound tax policy to legalize marijuana solely for the purpose of subjecting it to taxation.
Tax considerations aside, however, wise policy militates strongly in favor of legalization. Like it or not, the criminalization of marijuana has not forestalled the use or production of marijuana in the United States. To the contrary, marijuana has become America's biggest cash crop. Such widespread use in spite of criminalization undermines the institution of law in the eyes of the public. In addition, the logic of the law is undermined to the extent that users of marijuana are treated more harshly than users of more dangerous substances like alcohol and tobacco. To be sure, we cannot simply eliminate all difficult-to-enforce laws to avoid the appearance of lawlessness. However, where, as here, the prohibition is largely symbolic, the erosion of public respect for the law occasioned by known non-compliance with the law is unjustified.
- Robert Pear (NY Times), 6 Republicans Named to Deficit Panel
- U.S. Debt Clock
- BusinessWeek, Legalize Marijuana for Tax Revenue: Pros and Cons
- Paul Armentano and Paul Kuhn (The Tennessean), Marijuana Legalization Bill Offers Safer Alternative
- Press Release: New England Journal of Medicine Endorses Medical Marijuana
- Nitya Venkataraman (ABC News), Marijuana Called Top U.S. Cash Crop