Thursday, April 15, 2010

Myth of the Sin Tax

Writing at a time when the Great Recession's darkest days have passed, I'm constantly reminded that the proverbial light at the end of the tunnel is still a luminescent dot for most folks. On this date, the Los Angeles Times states that "44% of the unemployed have been without work for six months or more." That's a lot of hungry, crestfallen people. That's a lot of pain.

But working men and women aren't the only ones getting squeezed. Public services and institutions are feeling the heat, too. In California, where I live, it's now commonplace for any given city or state office to be closed during the week due to "furloughs" which is government-speak for "unpaid office closure." Universities can't accept as many students, and those who are accepted face extended careers because fewer classes are offered.

When there's widespread pain, you can always bet on the finger-pointing to begin. It's no different here, where a gubernatorial race is in its embryonic stage. "Insider" candidates claim "outsiders" have no experience, while ""outsiders" lambast "insiders" for messing things up in the first place.

What neither side realizes is that the solution to our problems isn't politics; it's money. We need more of it. The question is where to find it.

Californians are fond of pointing out that were it an independent country, the state would be home to the world's fifth largest economy. It's true. There's a lot of money generated here. And where there's revenue, there's a tax base just waiting to be tapped. Unfortunately, there's one source that goes completely untapped and that, of course, is the state's leading agricultural crop, marijuana.

Now before you get all worked up about it, this is not your typical plea for legalization. Personally, I don't care what you do as long as you're not endangering anyone else in the process. But I do care about stuff that works and solves problems. It's what I do for a living. And this is why legalization probably would go a long way to injecting billions into state coffers:

Sin taxes don't work.

For those of you unfamiliar with the term, a sin tax is an archaic form of moral imperialism, in which products and services are levied with heavy taxes on the theory that if the sin becomes too expensive, fewer people will be able to afford indulging in the sin. This is the reasons why cigarettes and alcohol are as expensive as they are. Were there no state or Federal sin taxes, most tobacco and alcohol products would retail for a fraction of their current prices.

As a matter of record, sin taxes have never done much to deter sinful practices. The wealthy simply pay for their vices; the poor simply steal to sustain their habits. And illegalizing controlled substances doesn't seem to slow its growth, if the daily beheadings in Mexico are any indication. Truth is the taxing authorities actually count on the sin tax to not work, because if it truly did deter usage, there would be no revenue to be gained from imposing it.

There are lots of people who smoke. And lots of people who drink. Trust me on this next one: There are lots of people who smoke dope. Which means that usage isn't affected by taxation or legality. It's a myth, supported by political theorists who spend more time alone with their cats than they do on the streets.

An increasing number of states are getting sucked down the budgetary rat hole, while their political caretakers sit idly by, their feet staying dry atop their moral soapboxes, providing no leadership or solutions. All of them pledge no taxes, because they think that's what the people want to hear. That's not what the people want to hear. People don't mind paying taxes -- as long as you're taxing the right stuff.