Down to grass tax

There aren't many state governors trickier than Arnold Schwarzenegger when it comes to budget sleight of hand, but New York Gov. Eliot Spitzer is Siegfried to his Roy. Spitzer's approach to his state's serious budget shortfall -- and it's so crafty that our pride is a little wounded because our governor didn't think of it first -- involves imposing a new tax on a group so universally despised that few voters could possibly object: drug dealers.

Spitzer's proposal, dubbed the "crack tax" by Gotham wags, is a sales tax on drugs such as marijuana and cocaine. Logicians and other wet blankets would argue that you can't tax an illegal product whose sales are of necessity off the public books, but that isn't quite true. After you've convicted a drug offender, you can seize his cash and other assets as taxes on the narcotics found in his possession.

Of course, that would be illegal if the dealer or addict never had an opportunity to pay the tax to begin with, and crystal meth profits aren't the kind of thing you can report on a 1040. New York has a solution for this: Dealers would be able to buy tax stamps from state authorities, costing $3.50 per gram of marijuana and $200 per gram of more powerful mind-melters such as cocaine and heroin, which they could then affix to their stash. If the cops raided a warehouse and turned up neatly stamped packs of crack, the dealer would still face drug charges, but at least he would be free of the tax bite. Of course, neither Spitzer nor anyone else actually expects drug dealers to buy the stamps; they're a necessary fiction.

The remarkable thing about the crack tax is that some version of it already exists in 29 states. Even more remarkable is that California, which never tires of piling new levies on social misfits like cigarette smokers, isn't one of them. Maybe that's because new taxes require a two-thirds vote of the Legislature in this state, and the crack tax is too wacky even for Left Coasters. Or because it's more than a little creepy to make the state reliant on drug sales to balance its books. Or perhaps it's that once one sets off down the road of taxing illegal activity, there's no telling where it will end. One New York assemblyman wondered aloud what kind of stamp authorities would affix to prostitutes if the governor decided to propose another kind of sin tax.

Then again, New York's deficit of $4.4 billion looks pretty manageable next to California's anticipated budget gap of $14.5 billion. Spitzer estimates that his crack tax will bring in $13 million in the first year. Schwarzenegger, meanwhile, has proposed closing the gap in part by shutting nearly one in five state parks, a move that would save ... wait for it ... $13 million.

We can see the campaign slogan now: Snort a rail, save a trail.

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