August 12, 2003

Second Thoughts on Drug Legalization

Walter Block discusses the "increased tax revenues" argument, that is frequently used by non-libertarians in defense of the legalization of drugs:

Don’t get me wrong. I am entirely and totally committed to the legalization of drugs. This includes all addictive substances, not just marijuana.

There are many good and sufficient reasons for this stance, none of which concern us today, since I wish, now, to discuss, not justifications for legalization, but, rather, one argument for prohibition, and one against legalization.

What then is the argument against legalization? Paradoxically, it is one often made by non-libertarians in favor of decriminalization. The argument goes as follows: right now, addictive drugs can only be bought and sold on the black market. As such, the government obtains no tax revenues thereby, since all these transactions are entirely off the books. However, if this industry were but recognized as a legitimate one, then its products could be taxed, just as in the case of all legal goods and services. Thus, the government could obtain more revenues than at present. And this in turn would mean either a reduction in other taxes, a lower deficit, more government services, or some combination of all three.

Any argument the conclusion of which is that the government will have more revenues at its disposal is highly problematic. For the libertarian, this is pretty much a refutation. For the state already has too much of our money, far too much. The last thing it needs is more encouragement, in the form of greater income. Yes, drugs should still be legalized, since their use and sale does not violate the libertarian non aggression axiom, but this should occur in spite of the fact that the tax take will rise, not because of it.