Article Summary
State tax revenue from marijuana sales in Colorado has surpassed $500 million since its legalization in January 2014. Colorado has imposed three types of state taxes on marijuana: a 2.9% sales tax on medical marijuana, a 15% special sales tax for recreational use, and a 15% excise tax on wholesale marijuana transfers. About half of the accumulated tax revenue has gone to K-12 education, with over $100 million used to fund school construction projects. Twenty-five percent of the tax is being spent on substance abuse prevention and treatment programs.
Source: Katelyn Newman, "Milestoned: Colorado Pot Tax Revenue Surpasses $500 M," usnews.com, July 20, 2017.
-Refer to the Article Summary.Colorado taxes marijuana with a 15% sales tax on recreational-use buyers and a 15% wholesale excise tax on producers, or a total tax of 30% based on the initial selling price.Suppose the actual burden of the tax falls 70 percent on consumers and 30 percent on producers.In this case, consumers will actually bear the tax burden of ________ percent of the selling price and producers will actually bear the tax burden of ________ percent of the selling price.

Question

Quizplus · Accepted Answer

If the actual burden of the tax falls 70% on consumers and 30% on producers, consumers will bear 21% of the tax burden (70% of 30% tax) and producers will bear 9% of the tax burden (30% of 30% tax). Therefore, the total tax burden on consumers will be 15% (2.9% sales tax + 15% special sales tax + 21% of wholesale excise tax) and on producers will be 15% (15% of wholesale excise tax + 9% of wholesale excise tax).

Article Summary State Tax Revenue from Marijuana Sales in Colorado Has Surpassed