Like death and taxes, you can count on the state to fumble the libertarian holy grail of recreational marijuana legalization. Take Colorado, for example.
There’s a ballot proposition (Prop BB) for next week’s election that allows the state to keep revenues from excise and sales taxes on pot, rather than having to return the excess to growers and taxpayers under Colorado’s TABOR.
Here’s a good summary of the up/down consequences from BallotPedia:
If voters approve the measure and the state keeps the money, it would be used for school construction and state programs [isn’t it always?]. If voters reject the measure, the money would be refunded by temporarily reducing the marijuana sales tax, returning funds to marijuana cultivators and the average taxpayer would receive about $8.
Now, the careless voter may say, “Hey! What’s $8 to me?” — and just vote “Yes” on BB, as is being encouraged by nearly everyone, except Grover Norquist’s Americans for Tax Reform, on the basis it’s a tax increase. What else?
But, being the conscientious type, and not buying the “tax increase” argument, I did a little digging to find out exactly what the
dopers consumers are paying as the effective tax rate on this now (locally) legal product. I mean, it’s their money, right? Why should I be getting even $8 of it, if it can be used for something good like school construction?
Care to guess? You have to remember the excise tax from grower to distributor is paid by the consumer, along with a sales tax just for pot, and then whatever the local city sales tax is. Mr. C guessed 10-15 percent. He would be wrong!
According the Tax Foundation, the effective rate in Denver is 29 percent. Here’s how it adds up:
Colorado collects tax revenue from marijuana sales through a 15 percent excise based tax on the average wholesale market rate; a 10 percent state tax on retail marijuana sales; a state sales tax of 2.9 percent; varied local sales taxes; and local marijuana taxes such as a 3.5 percent tax in Denver.
For comparison, cigarette taxes run 31 percent and beer taxes about 8 percent.
This is exactly what I feared when Colorado voted to legalize recreational marijuana — the state would overtax it to the point of encouraging a black market. If people are selling loosies illegally, you better believe there’s an underground market for pot with a tax rate nearly as high as that on tobacco. All the good that might have been done by taxing pot reasonably, regulating growers and distributors, and assuring the quality of their product is now at risk.
What’s the government equivalent of Murphy’s Law? Something about, `’If the state can screw something up, it will?” Well, if you think Colorado is messing up, Washington’s effective tax rate on pot is 44 percent — although its tax on tobacco is 104 percent!
I voted for Colorado to send me $8. We can’t trust these putzes with even that much.