NEW YORK'S 'CRACK TAX'

Gov. Eliot Spitzer has a plan to fill his state's budget hole, one
drug dealer at a time.

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.