Eli Dourado

Weed money

Like all libertarians, I favor the legalization of drugs. I don’t favor ending prohibition in order to give the government a new source of revenue; I favor ending it because I think people should be free to make their own decisions about drug use. Nevertheless, I recognize that the prospect of additional tax revenue is appealing to the people who make decisions about these matters, and I have always suspected that the ability to tax marijuana would be part of the impetus for its eventual legalization.

There’s a chart going around from Sloshspot that shows the forgone tax revenue from marijuana prohibition, as well as the total spending by government to reduce marijuana use. I gather the intended effect is to show the opportunity the government is missing to tax the drug. Assuming the statistics in the chart are correct, I am struck by the opposite conclusion: forgone tax revenues are only around 5 percent of the total cost to the government of prohibiting marijuana. Another way of stating this is that the forgone tax revenue is $2.60 per person. The median voter is unlikely to think, “Well, I am OK with spending $14.1 billion to keep marijuana illegal, but $14.9 billion?! That’s way too much. Now that I know that it’s costing that much, I am for outright legalization.” In other words, the tax revenue implications of this chart will convince no one but the innumerate (of which there are, admittedly, many).