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If you try to tax drugs, there will still be a significant black market. Just look at cigarettes - legal, but huge black market because there is money to be mad
by umvi 6y ago
If you try to tax drugs, there will still be a significant black market. Just look at cigarettes - legal, but huge black market because there is money to be made undercutting legitimate vendors with taxed goods.
- p1necone 6y agoA large part of the cost of illegal drugs comes from all the effort needed to avoid law enforcement along the supply chain. I'm sure a legitimate operation could save enough money from being able to just have large scale production and delivery in the open without having to hide it to make up for a few % of tax.
- bigtechdataeng 6y agoI think most of the cost is because of the personal and inventory risk that everyone involved carries. With 100x markup, seizures at borders aren’t as big a deal. And there are lots of people involved, each one adds markup.
- hchz 6y agoAvoid=Pay
- catalogia 6y ago> a few % of tax. The cigarette tax rate in New York is 2500% higher than the tax rate in Missouri. That's more than a few %, and that's just the state tax; NYC has their own additional tax that increases the difference even more.
- mekkkkkk 6y agoA black market will always exist as it does for anything. The problem we're trying to solve is the power of a huge market solely tapped by criminal enterprises. You don't see narcostates formed by black market tobacco or alcohol.
- eru 6y ago> A black market will always exist as it does for anything. A black market only exists when there's legal hurdles to avoid. Some markets have low enough legal hurdles, that there's no black market. (But I agree with the rest of your comment.)
- mekkkkkk 6y agoThat's true. Saying "anything" was a bit sloppy. I meant to say "any regulated/controlled substances".
- eru 6y agoYes. Though to be even more precise, the benefits of going outside of regular channels have to outweigh the burden of the regulation. Eg some countries have black markets in currency, because of tight controls. Singapore doesn't really have black markets in currency, despite some (light!) regulation and taxes on money changers.
- umanwizard 6y agoRight, but the dude who runs a bodega selling loosies in NYC doesn’t have enough power to meaningfully challenge the state.
- Broken_Hippo 6y agoI don't know, man. Most folks I've met that smoke cigarettes just buy them at the store. Occasionally, when folks travel, they pick them up at a lower tax state (or country). I'm not convinced the black market is really 'significant' since I'm guessing most folks go the legal route. It is just there. But then again, there is a somewhat thriving black market for detergent and soaps: In the US, Tide is often targeted, as are branded department store body soaps, shampoos, and razor blades. This isn't because soaps and things are taxed. Also, does tax make up for all of the risk markup? I very highly doubt it. IIRC, prices have gone down in places with legalization, in no small part because the whole process can be done out in the open.
- catalogia 6y agoAs I understand it, the primary customers of the cigarette black market are corner stores. The people who ultimately end up smoking those cigarettes don't know anything about it. In New York there's a $4.35 excise tax on a single pack of cigarettes. In Missouri it's $0.17. That huge delta provides a big opportunity for arbitrage.