Of course the false promise isn’t the tax money, it’s how they’re spending it. The money is coming in (about $150M in 2 years) but, surprise surprise, the government isn’t spending it the way they said they would.
I suspect the tax money is a less than zero sum game for several reasons.
They say that Colorado is on pace to sell $1 billion worth of pot in 2016. Let's make the math easy and assume a 10% tax rate. That's $100 million in new taxes.
But where did that $1 billion come from?
- Some of it comes from people from out of state and will be a temporary net new tax revenue to Colorado until the other states lower their standards to Colorado's.
- Some of the in-state revenues, came from previously illegal pot sales. Those illegal sales weren't taxed. So that does represents a net new tax. And at the same time defunds illegal activity a definite plus.
- The rest of the in-state revenues is money that would have been spent on other items or that would have been saved. If it would have been spent on other items, then the new taxes have displaced the old taxes.
- Now I supposed if people switched from smoking tobacco to pot, that money is no less productive than it would have been. But it is not new tax revenues. It's simply displaced tobacco sales taxes. And there may be more health issues with pot than tobacco, particularly mental illness.
- If the money would have been spent on other entertainment pursuits, then again, the money wouldn't have been particularly productive. But the entertainment choices may be narrowing as there are fewer dollars chaising non-pot entertainment.
- If the money would have been spent on long term assets such as land and buildings, or productive assets, equipment, education, investments, savings, etc, then wealth creation has been replaced by burning pot.
The real downside is the mental illness, by-polar and schizophrenia that pot use has been linked to. Colorado may find themselves with a future health and disability crisis. If so they will have burned their future up in pot.