When Taxpayers Welcome Taxes

by Dual Income No Kids on July 25, 2009 · 0 comments

Hi All,

Sometimes I come across something fun and controversial that’s worth pointing out. Well Stephen Levitt – of Freakonomics fame – has a great posting on why some California medical marijuana dispensaries are advocating that local governments tax them. Its not really about personal finance, but its a quick fun read.

Levitt writes…

The real answer, I suspect, is that he is generating $19 million a year in revenues selling in a market (medical marijuana) that is barely legal. And DeAngelo probably suspects that taxation will increase the likelihood that his business remains legal, for two reasons.

The first reason is that taxing a good implicitly says that the government acknowledges the legitimacy of the activity; we tax legitimate goods, and we fine and imprison those who sell illegitimate goods. Second, while experts suggest that marijuana itself is not very addictive, new sources of tax revenue surely are addictive! So once the revenues start coming, government won’t want to turn off the spigot.“

The rest of the posting is here.

Best,

James

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