New York 'Crack Tax' Proposal Is Derided

St. Pierre called it "bizarre, to say the least." Taxing drug dealers, and especially users, he said, "is like squeezing blood from a rock."

The Federation of Tax Administrators represents the tax collectors for the 50 states and the District, and Verenda Smith, the group's government affairs associate, called the drug tax an effective law enforcement tool. "The whole thing is about law enforcement," Smith said.

Most states with the law sell stamps that drug dealers can buy in advance, like what Spitzer is proposing. Because no drug dealers are known to buy the stamps and pay their tax in advance, the tax is usually levied after they are caught.

Some states have designed distinctive drug stamps, often depicting a marijuana leaf. Nebraska's drug stamp depicts a rolled joint crossed with a syringe in front of a skull and what appears to be a headstone, with the label "R.I.P."

"People do walk in and buy the stamps. We assume they are all stamp collectors," Smith said. "I believe only one person out of 50,000 has ever been a drug dealer." To avoid a court challenge, she said, the law has to allow anyone to buy the stamps without showing identification or alerting authorities that he or she is a drug dealer.

In many Southern states, such as North Carolina, the illicit substances tax is also applied to moonshine.

In New York, Spitzer proposed the drug tax in his 2008-09 budget as a way to deal with a projected shortfall, and in a memo said taxing drug dealers would raise $13 million in the coming fiscal year. The governor's office said the bill would contain strict secrecy requirements, so drug dealers who paid their taxes would not be incriminating themselves.

A tax stamp for a gram of marijuana would cost $3.50, and $200 for a gram of cocaine, "whether pure or diluted," according to the governor's proposal.

When Robert Megna, the New York tax commissioner, went to push the tax before a hearing at the state assembly, he was grilled by assembly member Jeffrion L. Aubry of Queens.

Aubry said he is concerned about figures compiled by a Queens College sociology professor, showing that between 1997 and 2006, about 360,000 New Yorkers were arrested for marijuana possession -- usually small amounts in a single joint, or nickel or dime bags -- and 85 percent of those arrested were black or Hispanic. Most of those received probation.

But Aubrey, in an interview, said he is concerned that adding a new tax would create more costs to the city by forcing police to impose a new charge: tax evasion.

"Our prison population has been declining," Aubry said. "This runs counter to that. . . . The poor, and minorities, are the ones who end up arrested, convicted and sentenced." Aubry vowed to fight what he called a "boneheaded" proposal.

Megna replied, "It's not our intent to burden certain portions of the population."

In the current anti-tax environment, politicians in states such as New York are reluctant to raise taxes more on average taxpayers, and prefer to cover budget shortfalls through what experts call "sin taxes," on products such as cigarettes and alcohol, or on activities such as visiting strip clubs. Texas, for example, recently introduced a levy on strip clubs known as "the pole tax."

New York, for its part, already taxes lap dances at strip clubs, but only if they are performed in the club's V.I.P. room, not on the couches in the main area of the club.

Strippers, like drug dealers, normally are not known to complain about more taxes. "I guess they didn't expect the drug dealers of New York to rise up and join the anti-tax movement," Aubry said.