Judge Strikes Down Tennessee Illegal Drug Tax as Unconstitutional

July 17, 2006

In the past we've blogged about the spread of illegal drug taxes on things like marijuana and cocaine (see here and here). Although law enforcement officials adamantly insist that the sole purpose of these taxes is to raise revenue, as an economist it's easy to see a more plausible rationale for them.

By taxing illicit substances, law enforcement authorities are provided with another tool to crack down on illegal drug use and distribution—even when suspects are able to avoid criminal conviction. Despite the public statements of law enforcement officials, the claim that the only purpose of these taxes is to raise revenue for programs like any other sales, property or income tax is highly implausible.

In the past, courts have overturned these taxes in many states on grounds that they force suspects to self-incriminate—after all, paying a "marijuana tax" is essentially an admission of guilt—and they subject suspects to double jeopardy, once through the criminal code and again through the civil code governing tax evasion.

Last week, Tennessee became the latest state to have its illegal drug tax struck down as unconstitutional. A Tennessee judge has ordered the state to abandon its highly-publicized illegal drug tax enacted just last year:

A judge in Nashville has thrown out Tennessee's tax on illegal drugs as unconstitutional.

The levy took effect in January of last year and applies to such illicit substances as cocaine, crack, methamphetamine and marijuana. The tax is levied per gram of illegal drugs: $3.50 for marijuana, $50 for cocaine, and $200 for meth and crack cocaine.

Moonshine and other liquor that tax hasn't been paid on are also included.

In the first year-and-a-half of the illegal drug tax, Tennessee has collected nearly $2.7 million in revenue.

Chancellor Richard Dinkins' ruling stopped the state from collecting more than $1 million from Jeremy Robbins, who is one of at least eight people accused of moving two tons of marijuana from Arizona to East Tennessee.

Dinkins found that being required to purchase the stamps for illegal activity violates the defendant's right against self-incrimination and to due process…

Tennessee is one of at least 23 states requiring tax stamps for illegal drugs.

Read the full piece here. See also this morning's editorial from the Tennessean arguing that the state should abandon the tax, rather than appeal the judge's ruling.


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