4 ms·

Are sin taxes really that volatile? I don't have good data, but many people suggest marijuana (as well as alcohol) is counter-cyclical and demand is relatively

by aggie 11y ago

Are sin taxes really that volatile? I don't have good data, but many people suggest marijuana (as well as alcohol) is counter-cyclical and demand is relatively inelastic. http://www.marketwatch.com/story/amid-the-stock-market-volatility-turn-to-the-stability-of-the-marijuana-market-2015-08-27 http://www.marketwatch.com/story/amid-the-stock-market-volat... edit: This study suggests alcohol is actually pro-cyclical (in Scandanavia). [pdf] http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.185.64&rep=rep1&type=pdf http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.185...

AaronFriel 11y ago
Even a small (4-6%) change in revenue can wipe out inflationary increases in funding for education. Even if they're counter-cyclical, the evidence is that replacing education funding with something more volatile is risky, because it's replacing consistent funding with something that is based on market dynamics. In the case of marijunaa, it's largely cultural.
- jlarocco 11y ago
  Colorado spent over $7 billion on education in FY2012-2013. The marijuana revenue number in the article is $70 million. Even if the pot revenue completely disappeared, it'd be less than a 1% change in total education funding. http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251749659390&ssbinary=true http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobhea...
- civilian 11y ago
  If we're looking to avoid volatile revenue streams, we should also avoid income taxes. But that's not really a starter, is it? http://taxfoundation.org/blog/new-sp-report-shows-income-taxes-are-volatile-sales-taxes-need-reform http://taxfoundation.org/blog/new-sp-report-shows-income-tax... A better solution would be to have a budget that accounted for potential volatility, and specified where surpluses should go, and where things should be cut from if revenues are down.
  - eru 11y ago
    Don't governments have the ability to go into debt for exactly that stabilizing function?
    - civilian 11y ago
      Yes, but wouldn't it be way better to make them honestly try to balance budgets, rather than knowing they can always over-run and kick the can down the road?
    - YokoZar 11y ago
      State governments generally do not without some creative accounting. Most states have "balanced budget" requirements, although they're allowed to issue bonds - provided said bonds are specifically earmarked for specific programs, and in some cases approved through a separate process like a referendum.
      - saryant 11y ago
        Some states also have rainy day funds they can tap into if they have an unexpected revenue shortfall.

by aggie 11y ago

AaronFriel 11y ago

Even a small (4-6%) change in revenue can wipe out inflationary increases in funding for education. Even if they're counter-cyclical, the evidence is that replacing education funding with something more volatile is risky, because it's replacing consistent funding with something that is based on market dynamics. In the case of marijunaa, it's largely cultural.

jlarocco 11y ago
Colorado spent over $7 billion on education in FY2012-2013. The marijuana revenue number in the article is $70 million. Even if the pot revenue completely disappeared, it'd be less than a 1% change in total education funding. http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251749659390&ssbinary=true http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobhea...
civilian 11y ago
If we're looking to avoid volatile revenue streams, we should also avoid income taxes. But that's not really a starter, is it? http://taxfoundation.org/blog/new-sp-report-shows-income-taxes-are-volatile-sales-taxes-need-reform http://taxfoundation.org/blog/new-sp-report-shows-income-tax... A better solution would be to have a budget that accounted for potential volatility, and specified where surpluses should go, and where things should be cut from if revenues are down.
- eru 11y ago
  Don't governments have the ability to go into debt for exactly that stabilizing function?
  - civilian 11y ago
    Yes, but wouldn't it be way better to make them honestly try to balance budgets, rather than knowing they can always over-run and kick the can down the road?
  - YokoZar 11y ago
    State governments generally do not without some creative accounting. Most states have "balanced budget" requirements, although they're allowed to issue bonds - provided said bonds are specifically earmarked for specific programs, and in some cases approved through a separate process like a referendum.
    - saryant 11y ago
      Some states also have rainy day funds they can tap into if they have an unexpected revenue shortfall.