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Cash-Poor States Consider Sin-Taxes


According to an article in The New York Times, the tough economy has prompted several states to consider new taxes wrapped in moral issues. Texas, Georgia and Pennsylvania are considering new taxes on pornography, strip clubs and escort services. Last year, according to a World Casino Index’s review, seven states either enacted new taxes or raised old ones on alcohol, 22 states have increased their taxes on tobacco, and 25 states have expanded or thought about expanding sanctioned gambling. Nevada’s Senate discussed expanding and taxing legalized prostitution, and advocates of legal marijuana in California tout the move’s potential tax revenue. Tax lawyers explain that it can be more politically attractive to tax these types of things, and historians typically document the reason for the end of Prohibition during the Great Depression as the creation of new jobs and additional sales taxes. Economists say that taxing “sin” doesn’t greatly affect the behavior of most Americans, since modest increases in price won’t prevent most people from buying alcohol, cigarettes, etc. The article said these efforts are the latest example of how fiscal desperation has forced state governments to rethink priorities and consider what current policies are still relevant. The article closed with the comment, “Sin taxes can spur us to rethink what behaviors are bad enough to be taxable…or in the case of marijuana legalization, what behavior is worth tolerating for the money.”