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http://ssrn.com/abstract=1710812
 
 

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The Budgetary Impact of Ending Drug Prohibition


Jeffrey A. Miron


Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Katherine Waldock


New York University (NYU) - Leonard N. Stern School of Business

September 27, 2010


Abstract:     
State and federal governments in the United States face massive looming fiscal deficits. One policy change that can reduce deficits is ending the drug war. Legalization means reduced expenditure on enforcement and an increase in tax revenue from legalized sales.

This report estimates that legalizing drugs would save roughly $41.3 billion per year in government expenditure on enforcement of prohibition. Of these savings, $25.7 billion would accrue to state and local governments, while $15.6 billion would accrue to the federal government.

Approximately $8.7 billion of the savings would result from legalization of marijuana and $32.6 billion from legalization of other drugs.

The report also estimates that drug legalization would yield tax revenue of $46.7 billion annually, assuming legal drugs were taxed at rates comparable to those on alcohol and tobacco. Approximately $8.7 billion of this revenue would result from legalization of marijuana and $38.0 billion from legalization of other drugs.

Number of Pages in PDF File: 62

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Date posted: November 19, 2010  

Suggested Citation

Miron, Jeffrey A. and Waldock, Katherine, The Budgetary Impact of Ending Drug Prohibition (September 27, 2010). Available at SSRN: http://ssrn.com/abstract=1710812 or http://dx.doi.org/10.2139/ssrn.1710812

Contact Information

Jeffrey A. Miron (Contact Author)
Harvard University - Department of Economics ( email )
Littauer Center
Cambridge, MA 02138
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Katherine Waldock
New York University (NYU) - Leonard N. Stern School of Business ( email )
44 West 4th Street
New York, NY NY 10012
United States
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