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.
