CO's Dope Taxes Up in Smoke?

[mrjarrell]

Has that ever worked?

Yep. Works every single day in the alcohol market. And you can see the opposite effect happening in the cigarette market. There's been a huge boom in the "illegal" cigarette market since the powers that be have started using smokes as a feeding trough. Low regulation and low, or no taxes, is how you make a product successful.

 

[HoughMade]

I thought legalizing eliminated the illegal trade...

...and all the ills of society.

 

[T.Lex]

Yep. Works every single day in the alcohol market.

Truly, I am unaware of the effect you describe.

There is still moonshine, tho less of it than 100 years ago. More apropos, I'm not familiar with changing taxation on alcohol (at all) or the effect it has on the amount of moonshine produced.

And you can see the opposite effect happening in the cigarette market. There's been a huge boom in the "illegal" cigarette market since the powers that be have started using smokes as a feeding trough.

Well, I'm not convinced that the corollary is true.

First, I remember there was a black market in cigs even back in the 80s.

Second, I will unhesitatingly concede that taxation - as well as any other reason for higher-than-market prices - induces people to trade in the black or gray markets.

To (nearly) eliminate the black markets, .gov would need to subsidize the product to create an artificially LOW price. Not much of a black market for soybeans, with gov't subsidies. But, even that is not a guarantee.

Low regulation and low, or no taxes, is how you make a product successful.

But... part of the reason for legalizing it is to allow .gov to make money on it. That was part of the bargain. Is this mission creep? Incrementatlism of the Libertarian agenda? (If the latter, I'd be very impressed.)

 

[KLB]

Truly, I am unaware of the effect you describe.

There is still moonshine, tho less of it than 100 years ago. More apropos, I'm not familiar with changing taxation on alcohol (at all) or the effect it has on the amount of moonshine produced.


Well, I'm not convinced that the corollary is true.

First, I remember there was a black market in cigs even back in the 80s.

Second, I will unhesitatingly concede that taxation - as well as any other reason for higher-than-market prices - induces people to trade in the black or gray markets.

To (nearly) eliminate the black markets, .gov would need to subsidize the product to create an artificially LOW price. Not much of a black market for soybeans, with gov't subsidies. But, even that is not a guarantee.


But... part of the reason for legalizing it is to allow .gov to make money on it. That was part of the bargain. Is this mission creep? Incrementatlism of the Libertarian agenda? (If the latter, I'd be very impressed.)

Why is there a black market for anything? Government regulation or taxation are the only reasons I can come up. If there is no regulation stopping the legal acquisition of the product and there is no taxation causing a higher price for the product, why would there be a black market for the product?

Just thought of a third, stolen products sold at less than market value.

 

[T.Lex]

Why is there a black market for anything? Government regulation or taxation are the only reasons I can come up. If there is no regulation stopping the legal acquisition of the product and there is no taxation causing a higher price for the product, why would there be a black market for the product?

Just thought of a third, stolen products sold at less than market value.

I worked for a private investigator for a couple years dealing with counterfeit merchandise. I also studied the Soviet system. My own idea is that black markets exist because of a distortion in the market, either on the supply side or in the cost-of-production.

China can produce things more cheaply than Western manufacturers, for a variety of reasons. So they do. Then they sell them. Interestingly, there's an article today about how Dow is trying to fight counterfeit bug sprays.
Dow Agro battles fake bug sprays
In this situation, the black market prices are lower.

Some might say the cost of production is high in the West because of taxes on business and cost of safety measures imposed by the gov't. That's a whole different rabbit hole.

Then, like in the Soviet system, black markets can exist for "ordinary" things that are scarce. That drives the black market prices up.

 

[Ericpwp]

So what if the .gov stole things from people, and sold them at market value for a profit?

 

[rambone]

So what if the .gov stole things from people, and sold them at market value for a profit?

Business as usual.

 

[Ericpwp]

 

[KLB]

I thought the .gov liked to skip the whole selling part and just take cash.

 

[AA&E]

That's how it was sold and now the productive class is left holding the bag (potentially) to make up that lost revenue from the dopers who just got a free ride on their backs.

I wonder how much in savings from not imprisoning these former criminals could be credited to the passing of this law...

 

[AA&E]

Yep. Works every single day in the alcohol market. And you can see the opposite effect happening in the cigarette market. There's been a huge boom in the "illegal" cigarette market since the powers that be have started using smokes as a feeding trough. Low regulation and low, or no taxes, is how you make a product successful.

Valid point.

 

[churchmouse]

People wildly overestimated the tax revenue from pot prior to the vote? I find that hard to believe.

Anyhoo, that the state will not be making much money from this does not surprise me....but I'm torn.

That people would avoid the tax by going the "medical" route or sticking with "old-fashioned" supply lines....utterly unsurprising.

That pretty much shoots the "underground supply chain will disappear" if we legalize it.......to pieces.

 

[Kirk Freeman]

I wonder how much in savings from not imprisoning these former criminals could be credited to the passing of this law...

A valid factor in the policy equation.

 

[AA&E]

So what if the .gov stole things from people, and sold them at market value for a profit?

assets forfeiture laws... they do this everyday without ever charging people with crimes.

 

[Denny347]

That pretty much shoots the "underground supply chain will disappear" if we legalize it.......to pieces.

Well, there are still moonshiners to this day so the black market never disappears but it is marginalized.

 

[seedubs1]

Gotta love loopholes. Just charge someones property with a crime. Property can't defend itself, and the owner has to prove it's innocence since property isn't innocent until proven guilty.

assets forfeiture laws... they do this everyday without ever charging people with crimes.

 

[steveh_131]

Do you guys think that black markets just pop up out of thin air?

Show me a black market and I will show you the government intervention that created it.

Well, there are still moonshiners to this day so the black market never disappears but it is marginalized.

Most 'moonshiners' that I'm aware of live in areas that still prohibit alcohol to some extent.

Unless you're talking about hobbyists?

 

[GodFearinGunTotin]

Do you guys think that black markets just pop up out of thin air?

Show me a black market and I will show you the government intervention that created it.



Most 'moonshiners' that I'm aware of live in areas that still prohibit alcohol to some extent.

Unless you're talking about hobbyists?

So the call for the legalize it, tax it, and regulate it many folks call for for marijuana is just another black market kick starter (or perpetuater)?

 

[T.Lex]

Show me a black market and I will show you the government intervention that created it.

Counterfeit bug spray.

 

[steveh_131]

So the call for the legalize it, tax it, and regulate it many folks call for for marijuana is just another black market kick starter (or perpetuater)?

I wouldn't call it 'another' black market. The more it is taxed and regulated, the more black market activity we will see. This is just economics.

Counterfeit bug spray.

That's just plain fraud, not really a black market. But the black market component is based on regulations against fraud.