Say Anything Blog

"among other illegal drugs (via Six Meat Buffet).

The Tennessean - Come the new year, the tax man is coming after drug dealers in Tennessee.

Drug peddlers will be required to pay state excise taxes on illegal substances from marijuana to moonshine, from cocaine to the often illegally obtained prescription painkiller OxyContin under a new law that goes into effect Saturday.

A 10-person tax agency has been created at a one-time cost of $1.2 million to assess the taxes and collect them. The annual cost to enforce the drug tax will be $800,000, said Elizabeth Fitzgerald, spokeswoman for the state Revenue Department.

The tax, however, is expected to more than cover the costs. One estimate by the law's sponsor, Sen. Randy McNally, R-Oak Ridge, projects collecting $3.6 million in one year.

Odd as this sounds, Tennessee isn't the first state to try this.

Tennessee joins at least 22 other states in taxing illegal drugs. Its law was modeled after North Carolina's, which has collected $83 million in the 14 years it has been on the books, said Laura Lansford, assistant director of that state's Unauthorized Substances Tax Division. Last fiscal year, the drug tax brought in $8.5 million, and $4.9 million since July 1, she said.

So how does it work?

Drug dealers can go to any of the state revenue offices within 48 hours of coming into possession of unauthorized substances. They pay the tax and get a ''stamp'' to put on the drugs showing they have paid up. They would not be required to give their name, address, Social Security number or other identifying information. State tax collectors would be constrained by taxpayer privacy laws from reporting them to police. Still, state officials say voluntary payment is unlikely to happen often.

The most probable way the tax will be collected is when police make drug busts. Law enforcement agencies are required to call tax officials within 48 hours detailing the drugs found.

Tax collectors then assess the tax on the drug suspects, as well as additional fines for not paying the tax in the first place. If the suspects cannot make immediate payment, the state seizes and sells any assets, such as cars, homes and personal belongings, to pay off the liability.

Paying the tax does not immunize a drug dealer from criminal prosecution, nor does nonpayment result in harsher jail sentences or fines, other than a tax penalty. Typical tax penalties are 5% of the unpaid tax liability.

''We consider this a revenue source for law enforcement's fight against narcotics and other illegal substances,'' said Al Laney, Tennessee's director of tax enforcement.

I understand the bit about issuing tax as a way for law enforcement to recoup expenses of arresting and imprisoning drug dealers"but what about the voluntary part? That just seems silly. What kind of drug dealer is going to voluntarily pay taxes on his illegal income? If you're already earning income from selling illegal drugs tax evasion seems like a rather small additional crime.

This all seems backward to me. If we're going to tax the sale of these drugs why not just drop the charade, legalize them and tax them as a legal source of revenue?