Taxing the underground economy

Did you guys know that drug dealers in Kansas are expected to pay taxes on the drugs they sell? This isn’t a joke :

The fact that dealing marijuana and controlled substances is illegal does not exempt it from taxation. Therefore drug dealers are required by law to purchase drug tax stamps.

The drug tax is due as soon as the dealer takes possession of the marijuana or controlled substance. Payment of the drug tax will purchase the drug tax stamps. Attach the stamp to the marijuana and/or controlled substance immediately after receiving the substance. The stamps are valid for 3 months. Drugs seized without stamps or having expired stamps may result in criminal or civil penalties which may include fines, seizure of property or liens against real estate.

But it gets even weirder. Check out the rates :

Drug tax assessment:
10 grams of cocaine x $200 per gram = $2,000
Penalty: $2,000 x 100% = $2,000
Total Liability: $2,000 + $2,000 = $4,000

What are the tax rates for marijuana?

Pursuant to K.S.A. 79-5202, the tax rates are:
Processed $3.50 per gram
Wet Plant $0.40 per gram
Dry Plant $0.90 per gram

What are the tax rates for controlled substances?

Pursuant to K.S.A. 79-5202, the tax rates are:
If customarily sold by weight (cocaine, methamphetamine, etc.) $200 per gram
If customarily sold by Dosage Unit (pills, etc.) $2,000 per 50 units

Does it strike anyone as a little hypocritical that the government would put itself in a position to profit off something that it’s actually campaigning against? It seems to me that if a program like this were successful, it would be in the government’s best interest to encourage illegal drug sales.


posted by greg on May 28, 2003 @ 1:10 pm

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