New York and the ‘crack-pot tax’

Struggling to close a $4.4 billion state government budget gap caused by excessive spending — as is usually the case, revenues continue to rise — Democratic Gov. Eliot L. Spitzer has proposed making New York’s illicit drug dealers pay a tax on their stashes. The new tax would apply to cocaine, heroin and marijuana, and could be paid by buying and affixing “tax stamps” to bags of dope.

The proposal has brought a predictable wave of ridicule.

“I guess if it moves, he’ll tax it,” charged Republican state Sen. Martin J. Golden, who dubbed the proposal “the crack tax.” Other opponents told The Washington Post 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 Sen. Golden, a former New York City police officer who represents a Brooklyn district. “Is prostitution next?”

Actually, at least 21 states — including Nevada — already have such seemingly hypocritical taxes in place. Nevada Revised Statute 372A, enacted in 1987, levies a tax of $100 per gram on marijuana and $1,000 per gram on other controlled substances.

The tax generated an estimated $2,750 in 1999 — most of that presumably from stamp collectors, though there have been cases in other states where those fighting for the legalization of marijuana have purchased the stamps in order to create a test case.

In the best-publicized example of such a protest, in November 1995, California hemp legalization activist Richard M. Davis, a Marine Corps veteran, learned that Arizona Judge John R. Barclay had dismissed charges against Arizona resident Peter Wilson for possession of cannabis because Mr. Wilson held a state cannabis dealer’s license.

As in dozens of other states, Arizona lawmakers never expected dealers in controlled substances to actually apply for such a license — they merely presumed (as Gov. Spitzer doubtless does) that the tax would constitute a “back door” way to seize the assets of drug dealers after they’re caught, by piling on the additional charge of “failure to buy a tax stamp.”

But Judge Barclay ruled that taxing a citizen for a license and stamps, and then putting him in jail for engaging in the privileged activity for which he had already paid his tax, constituted double jeopardy.

So Mr. Davis went to the Arizona Department of Revenue, filled out the forms, and paid $100 for his own Cannabis Dealers License. He then bought $676 worth of Arizona Cannabis Tax stamps, announcing he planned to sell taxed cannabis to crowds arriving in Tempe for the 1996 Super Bowl. Local police made two undercover purchases from him — the baggies properly stamped with the Arizona tax stamps — and proceeded to bust him, seizing his vehicle and his cash.

But Maricopa County Superior Court Judge Brian Ishikawa ruled Mr. Davis would not be allowed to present his licensing by the state as a defense on the charge of possessing and selling marijuana. The case wound on for years. Mr. Davis got his truck back, though authorities kept his $2,800 and his Tempe business license.

Last September, a state appeals court tossed out a similar drug tax law in Tennessee as 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.

Gov. Spitzer’s office insists the new tax would not trigger constitutional safeguards against self-incrimination, because it would contain strict secrecy requirements, allowing drug dealers to buy the stamps without giving their names.

Yeah, right.

The governor’s office estimates his new tax on drug dealers would raise $13 million in the coming fiscal year — most presumably grabbed from dealers after their arrests.

Ending the de facto tax exemption for this multibillion-dollar commerce may indeed make some budgetary sense — but this whole charade does nothing more than again highlight the hypocrisy inherent in too many facets of the never-ending drug war.