Grover Norquist, Supporter of High Taxes
A pot leaf. Photo: Jon Richfield/Wikimedia Commons
Two libertarians arguing about the right level of marijuana taxation. It sounds like an ideological tempest in a teakettle, if not the set up for a joke. Punch line: If it happens in a forest, do the trees want to fall down?
Yet it is a debate with resonance, as Washington and Colorado are set to legalize pot in the New Year and other states are considering doing the same. America's parties are going to have to come up with party lines on pot, beyond simple drug-war slogans. Intra-coalition skirmishes will help determine those messages.
In the low-tax corner is Jacob Sullum, a senior editor of the libertarian flagship magazine Reason; a former editor for the conservative, pot-friendly fortnightly National Review; and author of the book Saying Yes, which has a big fat joint on the cover.
And in the higher-tax corner is ... Grover Norquist?
Norquist, for those living under a rock or in Canada, is founder and president of Americans for Tax Reform, inventor of the Taxpayer Protection Pledge, and bête noir of progressive politicians and pundits.
Norquist's pledge, which commits its overwhelmingly Republican officeholder and officeseeker signatories to not raise any taxes without corresponding tax cuts elsewhere, is particularly reviled. It is said to be the enemy of good government and great government.
The ATR president's decision to "score" a piece of legislation as a pledge violation can sway Republican votes, and doom legislation where the GOP is firmly in power. Which made his take on new marijuana taxes of more than passing importance.
National Journal reporter Alex Seitz-Wald asked Norquist, wait a minute, don't Washington's and Colorado's plans to "levy steep excise taxes on the drug" count as a major pledge violation? After all, we didn't tax it before.
Norquist called such an approach "not a tax increase" but rather "legalizing an activity and having the traditional tax applied to it." Sure it might mean more revenues for government, he admitted, but so what? "When you legalize something and more people do more of it, and the government gets more revenue because there's more of it ... that's not a tax increase."
He also disputed the reporter's framing of the issue. With legalization followed by taxation, "The tax goes from 100 percent, meaning it's illegal, to whatever the tax is."
Seitz-Wald tried to follow up, saying that pot will be taxed at much higher rates than alcohol or cigarettes. Norquist waved it off as being all in the "same zone."
Sullum called balderdash. "If we were talking about the standard sales tax or income tax, Norquist's description would be accurate: Legalizing marijuana automatically makes it subject to taxes that apply to other legal industries," he wrote on Reason's blog, "But the special marijuana taxes are another matter. Surely those count as new taxes."
Further, "even if you accept the general idea of 'sin' taxes" -- those extra quotes being oh so necessary -- "on politically disfavored products, the pot taxes in both Colorado and Washington are much higher than those states' taxes on alcoholic beverages, contrary to what Norquist implies."
Sullum's implication was that if Norquist was being consistent, he'd oppose efforts to steeply tax the newly legal drug.
Norquist's counterargument to Sullum -- as it was to Seitz-Wald -- is that even an imperfect legalization effectively lowers the government tax on pot from We Can Just Take It and Throw You in Jail percent to whatever tax rate the state sets. He would, of course, oppose efforts to hike pot taxes that weren't closely connected with legalization.
Joel Miller, author of the drug-war history Bad Trip, takes the ATR president's side.* "Norquist is totally right. A regulation is a tax. It's the same thing. It's an obstacle on your money or your behavior," he told me.
To go from absolute prohibition to a fledgling free market, even a highly taxed one, Miller said, is a tax cut. That is true regardless of current alcohol or cigarette taxes. It establishes an enforceable property right to pot that cuts down on the theft and violence that mar the black-market trade.
But Sullum makes one further point that Miller does not discount, and that Norquist should probably consider, given the name of his organization: If taxes aren't set low enough, a robust black market in pot could stick around, making it that much harder for pot advocates in other states to roll their own marijuana reforms in the future.
*Full disclosure: I have worked with Sullum and Miller and once introduced Norquist at a luncheon. He was a good sport about it.
