Cite this article as:

Ermasova N. B., Barwegen C. J., Vick D. . Economic and Financial Effects of Specifi c Taxes at the State Level in the United States. Izv. Saratov Univ. (N. S.), Ser. Economics. Management. Law, 2018, vol. 18, iss. 4, pp. 442-449. DOI:


Economic and Financial Effects of Specifi c Taxes at the State Level in the United States

Introduction. This study describes states’ government experiences implementing new tax laws on goods with harmful properties. It provides a comparative analysis of new tax revenues in Colorado, Washington, Oregon, and Alaska.

Theoretical analysis. This paper explores the unintended consequences of new tax laws on state level in the United States. This article analyzes potential economic, health and fiscal effects based on Pigovian taxes approach. Pigovian economics discourages negative social activity by increasing tax burden associated with consumption without eliminating it or forcing it underground. Accordingly, taxes imposed on harmful commodities are intended to encourage people and businesses to consider the extra social cost when they decide to undertake the taxed item.

Empirical analysis. This paper analyses the new tax laws in Colorado, Washington, Oregon, and Alaska and tax revenues on harmful commodities. It provides comparative analysis of different types of taxes and fees in 19 states.

Results. The research shows the negative outcomes of its new tax initiatives –increased addiction rates, a increase level of expenditures on public health, etc. – with potentially positive ones – reduced prison populations, increased tax base, etc. The new tax policy shift will potentially cause a shift in expenditures from law enforcement to public health needs. New taxes laws on will increase state revenues on harmful commodities but also increase expenditures on public health and addiction-related costs.


1. National Conference of State Legislatures. Assessing 2014’s top state fi scal issues. 2014. Available at: (accessed 7 February 2018).

2. Lorenzi P. Taxing antisocial behavior for the common good. Society, 2010, vol. 47, no. 4, pp. 328–332.

3. Ekins G., Henchman, J. Marijuana Legalization and Taxes: Federal Revenue Impact. 2016. Available at: (accessed 9 April 2017).

4. Snowdon C. The wages of sin taxes. 2012. Available at: (accessed 9 April 2017).

5. Himmelstein J. L. The Strange Career of Marihuana: Politics and Ideology of Drug Control in America. Praeger, Greenwood Press, USA, 1983. 179 p.

6. Vick D., Rhoades E. Drugs and alcohol in the 21st Century. Sudbury, Massachusetts, Jones and Bartlett Publishers, USA, 2011. 400 p.

7. Johns T. Managing a Policy Experiment: Adopting and Implementing Recreational Marijuana Policies in Colorado. State and Local Government Review, 2015, vol. 47, no 3, pp. 193–204.

8. Henchman J., Scarboro M. Marijuana Legalization and Taxes: Lessons for Other States from Colorado and Washington. Tax Foundation. 2016. Available at: (accessed 15 April 2017).

9. Joffee A., Yancy S. Legalization of Marijuana: Potential Impact on Youth. American Academy of Pediatrics, 2004, vol. 113, no. 6, pp. 1–14.

10. Miron J. The Economics of Drug Prohibition and Drug Legalization. Social Research, 2001, vol. 68, no 3, pp. 835–855.

11. Ludlum M., Ford D. Colorado’s 2010. Update to the Medical Marijuana Law: Three Problems, Three Solutions. Mustang Journal of Law and Legal Studies, 2011, vol. 2, pp. 73–77.

12. Burman L. E., Slemrod J. Taxes in America: What everyone needs to know. New York, NY, Oxford Press University, 2013. 304 p.

13. Nye J. The Pigou Problem. Regulation, 2008, vol. 3, pp. 32–37.

14. Mann R. E., Zalcman R. F., Asbridge M., Suurval, H., Giesbrecht N. Drinking-driving fatalities and consumption of beer, wine and spirits. Drug and Alcohol Review, 2006, vol. 25, no 7, pp. 321–325.

15. Williams R., Christ, K. Taxing sin. Mercatus on Policy, 2009, vol. 55, no. 4, pp. 14–19.

16. Caulkins J. P., Bond B. M. Marijuana Price Gradients: Implications for Exports and Export-Generated Tax Revenue for California After Legalization. Journal of Drug Issues, 2012, vol. 42, no. 1, pp. 28–45.

17. Kempker J., Honig E., Martin G. The Effects of Marijuana Exposure on Expiratory Airfl ow. A Study of Adults who Participated in the U.S. National Health and Nutrition Examination Study. Annals of the American Thoracic Society, 2015, vol. 12, no. 2, pp. 135–141.

18. Pedersen E., Miles N., Osilla K., Ewing B., Hunter S., D’Amico E. The Effects of Mental Health Symptoms and Marijuana Expectancies on Marijuana Use and Consequences Among At-Risk Adolescents. Journal of Drug Issues, 2015, vol. 45, no. 2, pp. 151–165.

19. Washington State Liquor Control Board. Fiscal Impact through Fiscal Year 2017. 2018. Available at: (accessed 19 April 2018).

20. La Corte, R. Legal Pot in Washington Bringing in Even More Tax Revenue Than Predicted. Huffi ngton Post Business, 2015. October, 20. Available at: (accessed 15 April 2018).

Full Text (PDF): 
Short Text (PDF):