Pubdate: Sun, 1 Mar 2009
Source: New York Times (NY)
Page: A13
Copyright: 2009 The New York Times Company
Contact:  http://www.nytimes.com/
Details: http://www.mapinc.org/media/298
Author: Jesse McKinley
Bookmark: http://www.mapinc.org/find?115 (Marijuana - California)

STRUGGLING STATES LOOK TO UNORTHODOX TAXES

In his 11 years in the Washington Legislature, Representative Mark 
Miloscia says he has supported all manner of methods to fill the 
state's coffers, including increasing fees on property owners to help 
the homeless and taxes on alcohol and cigarettes, most of which, he 
said, passed "without a peep."

And so it was last month that Mr. Miloscia, a Democrat, decided he 
might try to "find a new tax source" -- pornography.

The response, however, was a turn-off.

"People came down on me like a ton of bricks," said Mr. Miloscia, who 
proposed an 18.5 percent sales tax on items like sex toys and adult 
magazines. "I didn't quite understand. Apparently porn is right up 
there with Mom and apple pie."

Mr. Miloscia's proposal died at the committee level, but he is far 
from the only legislator floating unorthodox ideas as more than 
two-thirds of the states face budget shortfalls.

"The most common phrase you hear from the states is, 'Everything is 
on the table,' " said Arturo Perez, a fiscal analyst with National 
Conference of State Legislatures, who predicted the worst financial 
year for states since the end of World War II.

Nowhere is that more true than California, where Assemblyman Tom 
Ammiano, a freshman from San Francisco, made a proposal intended to 
increase revenue, and, no doubt, appetite: legalizing and taxing 
marijuana, a major -- if technically illegal -- crop in the state. 
"We're all jonesing now for money," Mr. Ammiano said. "And there's 
this enormous industry out there."

In Nevada, State Senator Bob Coffin said he would introduce 
legislation to tax the state's legal brothels, a fee that would be 
"based on the amount of activities." And unlike the Washington porn 
proposal, which drew the ire of the adult entertainment industry, Mr. 
Coffin's plan has the backing of the potential taxpayers, in this 
case brothel owners who employ women as independent contractors.

"I think they figure if they become part of the tax stream, the less 
vulnerable they will be to some shift in mores," he said.

Hawaiian legislators were also considering capitalizing on another 
potential shift in public attitudes when they proposed legalizing 
same-sex unions, which supporters say could help the slumping tourism trade.

In Massachusetts, meanwhile, state legislators have introduced a 
proposal to build two resort-style casinos, including one in Boston. 
A similar push died last year in the State House of Representatives. 
But Representative Martin J. Walsh, a Dorchester Democrat and 
co-author of the new casino bill, said a $2 billion budget deficit 
might have changed some minds.

"Every state in the nation, including Massachusetts, needs to figure 
out a way of raising revenues," Mr. Walsh said. "So we need to be creative."

Scott Pattison, executive director of the National Association of 
State Budget Officers, said many lawmakers were loath to tap more 
traditional tax sources during a downturn. "What's pushing it is this 
incredible desire to raise revenue," Mr. Pattison said. "But it's 
coupled with the desire not to raise the general and sales and income taxes."

Whether such proposals can pass is another issue, though each idea 
has its supporters. Betty Yee, chairwoman of the California Board of 
Equalization, the state's tax collector, said that legal marijuana 
could raise nearly $1 billion per year via a $50-per-ounce fee 
charged to retailers. An additional $400 million could be raised 
through sales tax on marijuana sold to buyers.

The law would also establish a smoking age -- 21 -- effectively 
putting marijuana in a similar regulatory class as alcohol or 
tobacco. Marijuana advocates argue that legalization could also 
decrease pressure on the state's overburdened prison system and law 
enforcement officers.

All of which, Ms. Yee said, at least makes the proposal worth talking 
about in a state with chronic budget problems and a law already on 
the books allowing the medical use of the drug.

"We know the product is out there, and we know marijuana is available 
to young people as well, but there's no regulatory structure in 
place," Ms. Yee said. "I think it's an opportunity to begin the debate."

Such a debate, of course, does not always favor tax innovators. 
Several law enforcement groups have already objected to the idea of 
legal marijuana, which would conflict with federal law.

John Lovell, a lobbyist for several groups of California law 
enforcement officials, said the plan would create a large, illicit -- 
and thus untaxed -- black market, in addition to magnifying substance 
abuse problems. "The last thing we need is yet another legal 
substance that is mind-altering," Mr. Lovell said.

Having taxes on illegal activities, like a seldom-collected tax on 
marijuana sales in Nevada, also has its drawbacks, said Robert 
MacCoun, a professor of law and public policy at the University of 
California, Berkeley, who has researched drug policy.

"It is very hard to tax illegal vices unless one is comfortable with 
contradiction," Mr. MacCoun said. "How can you collect the taxes 
without documenting the behavior? And how can you document the 
behavior without making an arrest?"

In Washington State, Mr. Miloscia said he had also received criticism 
from an array of residents and business owners, who accused him of 
attacking the First Amendment and other sacred institutions with his 
pornography proposal.

"I had people call up saying their marriages would fall apart," said 
Mr. Miloscia, who represents a suburban district between Tacoma and 
Seattle. "I didn't know how passionate people are about this stuff." 
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MAP posted-by: Richard Lake