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Tennessee's Crack Tax  Brings in $2 Million from Compliant Criminals


Here's what can happen when government bureaucrats get creative: They come up with something like the crack tax.

Tennessee's Department of Revenue decided the state didn't have enough of it -- and invented a novel way of getting more. It decided to tax drug dealers, makers of moonshine whiskey, and other miscreants who traffic in illegal goods.

It goes without saying that nobody had been paying taxes on crack-cocaine deals and that sort of thing, which is why somebody coined the term crack tax to describe the novel revenue measure.

Don't laugh, say the bureaucrats. Crooks sent in almost $2 million in the program's first year last year. That's money Tennessee would not have otherwise had.

But why would drug dealers, who don't normally let strangers know about their shadowy transactions, willingly pay some of their profits to the government? Because under the Tennessee crack-tax law, if they're arrested for selling drugs or illegal spirits or contraband cigarettes, they'll be nailed for tax evasion on top of the regular criminal charges. It was tax cheating, after all -- not murder or selling bootleg whiskey -- that put gangster Al Capone in prison in the 1930s.

Tennessee's drug and illegal booze dealers can pay their crack taxes confidentially. If they're ever busted, they can produce a coded receipt to prove they paid up.

We would guess Tennessee's criminal element isn't wild about this crack tax, and neither are some law-abiding citizens. They say the state is legitimizing crime by officially taxing it. Others point out that the salaries of bureaucrats who run the program cost taxpayers almost as much as the money the crack tax brings in. For our part, we've heard of criminals paying their debt to society -- but not in advance!

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