By Pat Oglesby for New Revenue. After six years of studying taxation of marijuana, my firmest conclusion is that we should raise alcohol taxes. The market can stand a lot more tax before bootlegging becomes a noticeable problem. In Junior Johnson’s pre-NASCAR alcohol-running heyday, some 60 years ago, “A gallon of whiskey [bore] $11 tax. You could make it for 75 cents to a dollar and sell it for $3 or $4.”  Source: Junior Johnson, quoted in Peter Golenbock, American Zoom: Stock Car Racing – From the Dirt Tracks to Daytona, page 22 (MacMillan 1993). OK, he was rounding from $10.50 to $11, or including state taxes. The federal excise tax per proof gallon was $10.50. Still, despite that huge price advantage for bootlegged product, legal product dominated the market.  A key reason not to raise taxes is to keep the black market at bay, but we could raise alcohol taxes a lot before the black market can compete on price.

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