14 May 2016
How has marijuana legalization proceeded in the first states? How are taxes levied and how have they changed? What can we expect each state to collect in marijuana tax revenues moving forward? This report serves as a checklist for policymakers as they consider whether and how best to build a tax system around this new industry.
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How much revenue could be raised if the U.S. legalized and taxed marijuana? How much revenue would come from business taxes and individual income taxes in particular? What other effects could marijuana legalization have on the U.S. economy? This report takes what we already know about taxing marijuana at the state level, and estimates the impact of legalizing and taxing marijuana on a national scale.
- Marijuana tax collections in Colorado and Washington have exceeded initial estimates.
- A mature marijuana industry could generate up to $28 billion in tax revenues for federal, state, and local governments, including $7 billion in federal revenue: $5.5 billion from business taxes and $1.5 billion from income and payroll taxes.
- A federal tax of $23 per pound of product, similar to the federal tax on tobacco, could generate $500 million per year. Alternatively, a 10 percent sales surtax could generate $5.3 billion per year, with higher tax rates collecting proportionately more.
- The reduction of societal risk in being engaged in the marijuana trade, as well as the inclusion of taxes, will combine to reduce profits (and tax collections) somewhat from an initial level after national legalization.
- Society pays all the costs regardless of legality but tax revenues help offset those costs.
Read The Full Report Here
Source: The Tax Foundation