I read a fascinating article in a recent issue of Smithsonian magazine about Prohibition, about who and what made this social experiment that lasted from 1920 to 1933 possible. It turns out that this country’s changing tax needs were the critical factor.
Before 1913 an impressive 40 percent of all national tax revenues came from an excise tax on liquor. Whatever the joys of strong drink or the evils of John Barleycorn, the federal government couldn’t function without its liquor revenue.
But 1913 was the year that a constitutional amendment made direct taxes on income at the national level permissible. With a new income tax to bring in the money, Washington didn’t need as much revenue from booze. That was the math that made national Prohibition fiscally feasible a few years later in 1920.
Then the Depression arrived in 1929. Along with the huge hit on the overall economy that came in its wake, revenue from income taxes plummeted. And when the New Deal appeared in 1932, there was a great need for a lot more money to pay for its economic programs.
So…the country, already by then fed up with a Prohibition that did nothing but generate more drinking by more people while enriching the criminal classes, happily turned again to legal beer and booze, which also had the tax-friendly consequence of fattening the Treasury in a time when it needed all the fattening it could get.
The analogy to the present situation when it comes to the relationship of maryjane and federal budget deficits is so obvious it hardly merits noting — though I’ll do so anyway. In spite of foolish and excessive efforts to stamp our marijuana use, it’s more used than ever, and because it’s illegal supports a huge and very nasty criminal empire. This is the case at the same time our government is desperate for more revenue.
So here’s what’s almost certain to happen in the next couple of years when it comes to the long running marijuana opera. Medical marijuana will be legalized in more and more parts of the country and taxed, and eventually legalized at the federal level and heavily taxed. And because the maladies that medical marijuana helps heal are coincidentally exactly the things every human suffers from occasionally, the number of prescriptions will skyrocket and the tax take will be massive.
Won’t it be wonderful when Social Security and pointless but expensive foreign wars will both be financed in years to come by health seeking tokers? Get the old lava lamp out of the closet mama, we all won’t be inhaling again soon.
You can read more off-center financial analysis by this writer, in verse as well as prose, at wallstreetpoet.com
Copyright 2010 The Moderate Voice