HTTP/1.0 200 OK Content-Type: text/html New York 'Crack Tax' Proposal Is Derided
Pubdate: Sun, 17 Feb 2008
Source: Washington Post (DC)
Page: A05
Copyright: 2008 The Washington Post Company
Contact:  http://www.washingtonpost.com/
Details: http://www.mapinc.org/media/491
Author: Keith B. Richburg
Bookmark: http://www.mapinc.org/topic/tax+stamps
Bookmark: http://www.mapinc.org/pot.htm (Marijuana)
Bookmark: http://www.mapinc.org/coke.htm (Cocaine)
Bookmark: http://www.mapinc.org/heroin.htm (Heroin)

NEW YORK 'CRACK TAX' PROPOSAL IS DERIDED

Many States Aid Enforcement With Levy on Illicit Drugs

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.

"It was a way of getting tougher on criminals," said Joseph D. 
Henchman, tax counsel for the Tax Foundation, a Washington-based 
educational group. "It kind of boggles my mind. If you want to get 
tougher on drug dealers, increase the penalties."

"It's just weird to put an excise tax on an illegal substance," 
Henchman said. "When you tax something, it's a way for the government 
to say you can have it, but we want a piece of it. . . . It's sending 
a mixed signal."

Last September, a state appeals court ruled a drug law in Tennessee 
unconstitutional, saying that an illegal substance could not be 
taxed. In Massachusetts, that state's supreme court in 1998 ruled a 
drug tax was an unconstitutional form of "double jeopardy," so it is 
not used, although it remains on the books, according to the revenue 
department in Boston.

Allen St. Pierre, executive director of NORML, the National 
Organization for the Reform of Marijuana Laws, called the drug tax "a 
wacky idea. It's a quintessential example of the absurdity of the war 
on some drugs."

St. Pierre called it "bizarre, to say the least." Taxing drug 
dealers, and especially users, he said, "is like squeezing blood from a rock."

The Federation of Tax Administrators represents the tax collectors 
for the 50 states and the District, and Verenda Smith, the group's 
government affairs associate, called the drug tax an effective law 
enforcement tool. "The whole thing is about law enforcement," Smith said.

Most states with the law sell stamps that drug dealers can buy in 
advance, like what Spitzer is proposing. Because no drug dealers are 
known to buy the stamps and pay their tax in advance, the tax is 
usually levied after they are caught.

Some states have designed distinctive drug stamps, often depicting a 
marijuana leaf. Nebraska's drug stamp depicts a rolled joint crossed 
with a syringe in front of a skull and what appears to be a 
headstone, with the label "R.I.P."

"People do walk in and buy the stamps. We assume they are all stamp 
collectors," Smith said. "I believe only one person out of 50,000 has 
ever been a drug dealer." To avoid a court challenge, she said, the 
law has to allow anyone to buy the stamps without showing 
identification or alerting authorities that he or she is a drug dealer.

In many Southern states, such as North Carolina, the illicit 
substances tax is also applied to moonshine.

In New York, Spitzer proposed the drug tax in his 2008-09 budget as a 
way to deal with a projected shortfall, and in a memo said taxing 
drug dealers would raise $13 million in the coming fiscal year. The 
governor's office said the bill would contain strict secrecy 
requirements, so drug dealers who paid their taxes would not be 
incriminating themselves.

A tax stamp for a gram of marijuana would cost $3.50, and $200 for a 
gram of cocaine, "whether pure or diluted," according to the 
governor's proposal.

When Robert Megna, the New York tax commissioner, went to push the 
tax before a hearing at the state assembly, he was grilled by 
assembly member Jeffrion L. Aubry of Queens.

Aubry said he is concerned about figures compiled by a Queens College 
sociology professor, showing that between 1997 and 2006, about 
360,000 New Yorkers were arrested for marijuana possession -- usually 
small amounts in a single joint, or nickel or dime bags -- and 85 
percent of those arrested were black or Hispanic. Most of those 
received probation.

But Aubrey, in an interview, said he is concerned that adding a new 
tax would create more costs to the city by forcing police to impose a 
new charge: tax evasion.

"Our prison population has been declining," Aubry said. "This runs 
counter to that. . . . The poor, and minorities, are the ones who end 
up arrested, convicted and sentenced." Aubry vowed to fight what he 
called a "boneheaded" proposal.

Megna replied, "It's not our intent to burden certain portions of the 
population."

In the current anti-tax environment, politicians in states such as 
New York are reluctant to raise taxes more on average taxpayers, and 
prefer to cover budget shortfalls through what experts call "sin 
taxes," on products such as cigarettes and alcohol, or on activities 
such as visiting strip clubs. Texas, for example, recently introduced 
a levy on strip clubs known as "the pole tax."

New York, for its part, already taxes lap dances at strip clubs, but 
only if they are performed in the club's V.I.P. room, not on the 
couches in the main area of the club.

Strippers, like drug dealers, normally are not known to complain 
about more taxes. "I guess they didn't expect the drug dealers of New 
York to rise up and join the anti-tax movement," Aubry said. 
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MAP posted-by: Richard Lake