Marijuana sales tax could swamp revenue dept. with cash

The Montana Department of Revenue (artist’s conception)

This spring, after Montana re-legalized medical marijuana, the legislature imposed a 4% sales tax. It is likely that much of the revenue from this tax will come in as cash. Because marijuana is still illegal at the federal level, banks that operate across state lines are reluctant to do business with dispensaries. Many providers can’t accept credit cards, much less set up business accounts to wire money to Helena. The question of how they will transport quarterly cash payments to the Department of Revenue has exciting security ramifications. Perhaps more exciting is the question of what Revenue will do with that cash once it comes in.

Speaking to the Billings Gazette, Deputy Director Gene Walborn predicted business as usual. He said his agency would “maybe [get] some cash counters and that kind of thing.” Revenue anticipates bringing in about $750,000. That figure is based on an estimate of 11,877 medical marijuana cardholders across the state—the average number in 2016, under the old law, when providers were limited to three customers apiece and forbidden from turning a profit.

Since I-182 lifted those restrictions, the number of cardholders has risen to 15,564. That’s a 31% increase in six months, during a period when dispensaries were just beginning to open up again. After the state’s first attempt at medical marijuana legalization, before the patient and profit limits went into effect, the number of cardholders peaked at 30,000. It seems like the Department of Revenue could get a lot more cash than it expects. Its plan to do nothing might have more to do with what’s easiest than with what conditions suggest.

In this way, Revenue is continuing a tradition. From the legalization that triggered a statewide boom in the last decade to the restrictions that abruptly shut it down in 2011, Helena has consistently done what it would about medical marijuana and considered the consequences later. You can read all about our state government’s steadfast refusal to plan ahead in this week’s column for the Missoula Independent.

While you’re there, check out this piece about the final legal bill for acquiring Mountain Water. When it first embarked on this project in 2014, the City of Missoula estimated that the legal cost of purchasing the city’s water system through eminent domain would come to $400,000. The city took ownership last Thursday, and its final legal bill was $7.4 million. That’s 19 times the original estimate. But that kind of thing happens when you’re doing business. It’s like when you buy a car for 15 grand but, after taxes and fees, the final price comes to $285,000.

In other news, my mother is in town, so this is the last Combat! blog you’re going to see until Wednesday. That’s a long time, right? I sure hope nothing happens in the news between now and then.

Laffer Curve returns to feast on brains of living

Something d-o-o economics

If you want your name to live forever in politics, come up with a reason why helping rich people is good for everybody. That’s what Arthur Laffer did in 1974, when he drew his famous curve on a napkin. The  Laffer Curve illustrates the theory that lowering tax rates can sometimes increase overall tax revenues by stimulating economic growth. This argument makes sense, as far as it goes, but it doesn’t tell us much. To many people, though, the Laffer Curve means that cutting taxes raises revenue. That’s the argument Treasury Secretary Paul Mnuchin made this week to justify President Trump’s plan to dramatically reduce corporate taxes. Won’t lowering taxes add to the deficit? Nah. “The tax plan will pay for itself with economic growth,” Mnuchin said. Well then. That sounds fortuitous.

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GOP issues “moral document” in the form of 10-year budget plan

Paul Ryan (R–WI) pretends to think about your birthday present, but you're getting an iTunes card.

Rep. Paul Ryan (R–WI) pretends to think about your birthday present, but you’re getting an iTunes gift card.

If you want to feel superior and depressed at the same time, read this New York Times story on the budget plan House Republicans submitted last week. The good news is that it balances the federal budget by 2025. The bad news is that it does so by assuming $147 billion in additional revenue from the “macroeconomic effect” of the budget itself. It also repeals the Affordable Care Act and the taxes that support it, but still includes $1 trillion in revenue from those taxes. Finally, it counts $1 trillion in savings from unspecified cuts to social welfare programs. Don’t worry, though: there’s a $40 billion increase in defense spending next year, couched as “emergency war spending” so as not to violate the 2011 Budget Control Act. We’ll find the war later. As Rep. Rob Woodall (R–GA) of the House Budget Committee put it, “A budget is a moral document; it talks about where your values are.”

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Results of red-state “experiment” look bad for Kansas, but theory remains

Kansas Governor Sam Brownback

Kansas Governor Sam Brownback

One of the problems of contemporary conservatism is that it is largely theoretical. A lot of ideas now fashionable in the Republican Party are hard to evaluate on their merits, because they have never been tried. Some, like abolishing the Federal Reserve or income tax, remain theoretical because they would require us to reverse history. Others, like the belief that lowering taxes on the wealthy stimulates economic growth, are unfalsifiable because they have been stymied by political opposition. But no such opposition has existed in Kansas, where former Senator Sam Brownback was elected governor in 2010. For almost four years now, Brownback has conducted a “red-state experiment,” cutting taxes, restricting abortion, and dramatically reducing spending on schools. He put conservative theory into practice, and the results are in: poverty went up, the state budget faces a $300 million shortfall, and the Kansas economy has grown at half the rate of its four neighbors.

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