> It will turn the price of drugs into price + taxes. The current complex distribution and supply network doesn't have to pay taxes because they are already illegal, so they'll continue to charge the current price.
Under the current scheme, the street price of drugs represents price + cost of maintaining a standing army + maintenance of baroque, multi-tier, low-capacity, high-overhead supply chain + "hazard pay" level wages for everyone involved in the enterprise.
So just focusing on taxes gives an unrealistic view of the situation. No, they're not paying taxes, but they're paying for scads and scads of other things, and have to pass that cost on to the consumer. This is pure deadweight loss, just as taxes would be. But it's also a relatively enormous loss; it would be very easy to come up with a tax rate that fits in below it. I suspect that anything less than four digits should do the trick, which means that we could even set the rate many times higher than the current rate for cigarettes and be fine.
And the market will not support operating an illegal network that's more expensive than the costs imposed by taxation. Take tobacco: organized crime is absolutely still involved in tobacco smuggling. And with excise taxes on cigarettes in the US averaging over 100%, that shouldn't be surprising. But at the same time, it doesn't seem to be supporting organized crime and associated social costs on anything near the scale we've seen with groups like the Zetas or al-Qaeda.
Under the current scheme, the street price of drugs represents price + cost of maintaining a standing army + maintenance of baroque, multi-tier, low-capacity, high-overhead supply chain + "hazard pay" level wages for everyone involved in the enterprise.
So just focusing on taxes gives an unrealistic view of the situation. No, they're not paying taxes, but they're paying for scads and scads of other things, and have to pass that cost on to the consumer. This is pure deadweight loss, just as taxes would be. But it's also a relatively enormous loss; it would be very easy to come up with a tax rate that fits in below it. I suspect that anything less than four digits should do the trick, which means that we could even set the rate many times higher than the current rate for cigarettes and be fine.
And the market will not support operating an illegal network that's more expensive than the costs imposed by taxation. Take tobacco: organized crime is absolutely still involved in tobacco smuggling. And with excise taxes on cigarettes in the US averaging over 100%, that shouldn't be surprising. But at the same time, it doesn't seem to be supporting organized crime and associated social costs on anything near the scale we've seen with groups like the Zetas or al-Qaeda.