In a move that has stunned even some of his Democratic party allies, New York Governor Eliot Spitzer is proposing the taxation of illegal drugs. His plan calls for illegal drug dealers to purchase tax stamps to affix to the bags of drugs. No, really, he is proposing this. While a surprisingly large number of states have illegal drug taxation laws on the books, they are meant as enforcement tools since it is often easier to get a tax evasion conviction. (Think about how the Federal government got Al Capone.) Spitzer, however, is proposing this as a revenue tool only.
NEW YORK — If you can't beat it, tax it.
That seems to be the axiom in New York these days, where Gov. Eliot L. Spitzer (D), struggling to close a $4.4 billion budget gap, has proposed making drug dealers pay tax on their stashes of illegal drugs. The new tax would apply to cocaine, heroin and marijuana, and could be paid with pre-bought "tax stamps" affixed to the bags of dope.
Some critics in the legislature are asking what the governor has been smoking.
"I guess if it moves, he'll tax it," said Republican state Sen. Martin J. Golden, who dubbed the proposal "the crack tax." Some opponents said that because cocaine and weed would be subject to the new levies, it should more aptly be called "the crack-pot tax."
"How do I explain to my 16-year-old son that we're giving a certain legitimacy to marijuana, cocaine and heroin?" asked Golden, a former New York City police officer who represents a Brooklyn district. "We are taxing an illegal substance." He added, "Is prostitution next?"
On the other side of the aisle, some Democrats, too, were stunned by the plan. "My initial instinct is: I don't understand it," said Bill Perkins, a state senator from Harlem. "Most of the dealers I'm familiar with are petty crack dealers — most of them are crackheads. They are broke, to say the least. I just don't understand how you impose a tax" on broke crackheads, he said.
Taxing illegal drugs is more widespread than is generally known. At least 21 states have some form of tax for illicit drugs, although some of those laws have been challenged in courts, and others have fallen into disuse. Almost all the remaining drug-tax laws are used mainly by local law enforcement agencies as a way to seize drug money and fund counter-narcotics operations.
The controversial idea grew out of the efforts to fight bootleggers such as Al Capone during Prohibition — going after the bootleggers for unpaid taxes often required a lighter burden of proof than a criminal prosecution. Taxing illicit drugs gained popularity during the 1980s and early 1990s, when prosecutors and law enforcement authorities were pushing for mandatory sentences and other measures to signal a crackdown on drugs and drug use.
Courts in Massachusetts and Tennessee have recently struck down their state illegal drug taxation laws as unconstitutional. While experts believe the taxation laws are relatively effect enforcement tools, no other state is attempting to use them as a revenue tool. Spitzer is claiming that the law would raise some $13 million in the first year. Yet in those states that do have similar programs, no drug dealers actually buy the stamps.