Reason.com
Tennessee's 'Drug Tax' Overturned
Last week the Tennessee Supreme Court overturned that state's "tax" on illegal drugs, which disguised punishment as a revenue measure. The case involved Steven Waters, who in 2005 paid an undercover agent in Knox County $12,000 for a kilogram of cocaine. The state Department of Revenue assessed a tax of $55,000 on the cocaine and seized Waters' bank account to cover it. Waters (who also was successfully prosecuted in criminal court) challenged the tax, arguing that it violated his right to due process and the guarantee against compelled self-incrimination. The local chancery court agreed, but both the appeals court and the Tennessee Supreme Court rejected the tax on different grounds, saying it was not authorized by the state constitution. The constitution allows state taxes on "privileges," "merchants," and "peddlers." Since possessing cocaine for nonmedical purposes is illegal, the Supreme Court reasoned, it can hardly be considered a privilege. And since the tax applies to mere possession, whether or not a sale occurs, it is not a levy on "merchants" or "peddlers" either.
I discussed the Waters case here, the Tennessee tax here and here, and then-New York Gov. Eliot Spitzer's interest in this innovative approach to combating vice here. For more on the subject, see this 2000 Reason article and this 2007 Reason Foundation study.
[Thanks to Justin Owen for the tip.]
Most Popular Stories
Reason RUPE: Public Opinion Survey
- Wisconsin: 65 Percent Believe Gov’t Workers Receive Better Retirement Benefits (5.29)
- Wisconsin: 69 Percent Favor 401(k)-Style Accounts for Government Workers (5.29)
- 17 Percent of Wisconsinites Favor Disbursing Retirement Benefits to Gov’t Workers Before Age 65 (5.29)
- Reason-Rupe: Wisconsinites Favor Increasing Public Union Retirement Contributions to Address Budget Deficit (5.25)
- Reason-Rupe Poll Finds Support for Public Union Reforms (5.25)
advertisements
Reason on Facebook
Reason on Twitter
Reason on YouTube
Reason RSSGet Reason E-mail Updates!
Manage your Reason e-mail list subscriptionsSite comments/questions:
Media Inquiries and Reprint Permissions:
(310) 367-6109
Editorial & Production Offices:
3415 S. Sepulveda Blvd.
Suite 400
Los Angeles, CA 90034
(310) 391-2245
Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment or disable your ability to comment for any reason at any time.
wingnutx|7.27.09 @ 5:20PM|#
Arizona tried this, until the first guy that had actually bought tax stamps for his pot walked out of jail.
Court rules that it was double-jeopardy to penalize him since he had already paid a punitive tax.
|7.28.09 @ 1:32AM|#
>which disguised punishment as a revenue measure.
Interesting twist. Usually, governments prefer to disguise revenue measures as punishment.
Art-P.O.G.|7.28.09 @ 3:56AM|#
Wilson for the win. And did I read that right? 458% "tax"?
|7.28.09 @ 2:11PM|#
It isn't innovative. Check out Timothy Leary v. United States (not kidding, there really was such a case before the Supreme Court).
http://en.wikipedia.org/wiki/Leary_v._United_States