Arnold Kling  

Regulatory Tariffs Vs. Quotas

Government Overgrowth, II... Institutional Survival...

Reason Foundation's Ted Balaker sees a libertarian silver lining in the cloud of state government budget deficits.

After all, some states are now eyeing legalized gambling as a new cash cow. Maybe the next step will be to legalize – and tax – marijuana.

It is a well-known proposition in international trade that trade quotas create windfalls for the owners of quotas, while tariffs create tax revenue. Balaker is suggesting that governments are seeing opportunities to obtain revenue by changing from regulatory quotas against gambling or Sunday alcohol sales to taxes on such activities.

For Discussion. What are the pros and cons of having state governments rely on taxes on cigarettes, alcohol, recreational drugs, gambling, prostitution, etc.?

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COMMENTS (3 to date)
David Thomson writes:

I eagerly advocate for the states’ passive acceptance of certain vices. The war on drugs, for instance, is ridiculous and literally threatens the rights of innocent people. Many citizens have been shot to death in their homes because drug police invaded the wrong residence. However, I have serious reservations about our local governments actively encouraging gambling, or prostitution. Tolerance is one thing, but active endorsement is something entirely different. A junkie should perhaps go to hell in a hand basket if they so choose. The rest of us, though, should not be directly benefitting because of the taxes collected from their addiction.

At this very moment our states are in a Catch 22 predicament regarding tobacco use. Their citizens health is damaged---yet they greatly rely on the collected tax and revenues generated from the legal settlements. There’s something rotten about this set of circumstances.

Sean Hackbarth writes:

A pro- argument is that the revenue would come from consumption. Possibly it would reduce the state's need to tax income. On the con- side it would just be another source of revenue for the state. There's no reason other taxes (and spendind) would be reduced. The end result would be bigger, more expensive government.

Billy writes:

Ok well first off. why would someone say that sooner than later the government will probably legalize marijuana. for some reason that just really sets me off. i mean for starters, why would we( the government) be fighting the war on drugs and then we decide to legalize it. come on now people if you are going to make a statement about something, at least state the facts not the fiction. and yes some people do die from drug raids. the police and fbi are only doing there jobs and are only going off of the information provided to them at the time. and why do you think some inncoent people are shot and killed by law enforcement officers or by other units of the drug community. you know not everyone that is shot and killed is exactly innocent. and another thing why is it that the only people that judge our way of life are the liberals. i have been a conservative for ever, and i will always be a conservative. but dont judge stuff that you have no backround on, and dont make statements that arnt true. now i know that the liberals are famous for making (fictional) statements about our economy, and about how we didnt need to go into iraq. but come on now this is something different. we need to stop drugs now and, no we will not be making marijuana legal. are you(high) becasue a statement like that leads me to believe you are. and whats wrong with gambling. who cares if people want to blow their money on a chance to win more. why do people have to be so judgemental of everyone else, who cares leave people alone.

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