Abstract
A “Harmfulness Tax” is proposed as an alternative to the present unsuccessful drug prohibition policy. Both legal and currently illegal drugs would be taxed in proportion to the social cost associated with their use. In a sense, drug users would be required to buy insurance against the harm their drug use might cause to society. The scheme would be implemented in stages beginning with alcohol, tobacco and marijuana. After the program had been established in this way, it would be extended to other drugs, including cocaine. This proposal accords well with experiences gained in taxing legal drugs and with the realities of current drug use in America.
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