Public Finance
| More

Gun Taxes and State Revenues

A handful of states and localities are considering gun and ammunition taxes. Is there any state and local revenue in this approach?



Last October, Cook County, Ill., Board President Toni Preckwinkle asked the county council to tax ammunition -- a nickel a bullet. The idea wasn't exactly laughed out of legislative corridors -- it was projected to raise $400,000 a year after all -- but Preckwinkle ultimately withdrew her bullet tax. She also pushed for a $25-per-gun tax on firearms sales. In February, that tax became law, with projections that it would raise $600,000 this year alone.

By passing the gun tax, Cook County, the third most populous county in the country (which also includes much of Chicago), became the first large U.S. jurisdiction to approve such a measure, according to the Law Center to Prevent Gun Violence.

Preckwinkle's motivation for both the gun and the ammunition taxes was to provide more money to help the county address the costly fallout from such crime. It costs the county's health system $52,000 per patient to care for victims of gun violence -- and last year there were 670 victims needing county care.

In that sense, Preckwinkle is linking a gun or ammunition tax to excise taxes, which usually redress specific societal costs associated with the product being assessed. In the eyes of three Harvard University professors, such a form of taxation has a long -- and successful -- public health history. "We tax items with negative externalities," says Dr. David Hemenway, professor of Health Policy at the Harvard School of Public Health. Hemenway, along with two Harvard physicians, recently authored a paper in the Journal of American Medical Association called "Curbing Gun Violence: Lessons From Public Health Successes."

 

This appears in our free Finance newsletter. Not already a subscriber? Click here.

Hemenway's externalities comment was referring to how a product's price may not reflect its cost to society. Cigarettes, for example, have externalities that include higher health-care costs for the smoker and for the people exposed to secondhand smoke. The money raised by taxing tobacco has been used, among other things, to fund the treatment of tobacco-related illnesses. The funds raised by taxing guns and ammunition, Hemenway suggests, could be used for preventative measures and to help victims of gun violence.

In calling for a tax, Hemenway and his fellow authors are looking beyond state and local efforts. They would like to see a "new, substantial national tax on all firearms and ammunition," one that would provide stable funding for a "national endowment to benefit those harmed by gun violence and their families; a sustained public awareness campaign to increase gun safety, reduce gun violence, and assist in recognition of at-risk individuals; and stronger enforcement of existing gun laws. Such efforts would not necessarily be intended to reduce ownership, a key regulatory and political distinction."

Their point: Taxing guns should be part of an overall public health program to stem gun violence.

There is, of course, already a federal excise tax on firearms -- the Firearms and Ammunition Excise Tax (FAET), more commonly known as Pittman-Robertson, after the legislators who pushed for it. Pittman-Robertson, which has been on the books since 1919, is imposed on the sale of firearms and ammunition by manufacturers, producers and importers. The law currently levies an 11 percent tax on shotguns and rifles, archery equipment and ammunition, and a 10 percent tax on handguns.

Revenue raised by Pittman-Robertson can be used only for conservation of wildlife habitats, land purchases and wildlife research. The idea driving the law a century ago was to protect the many species of wildlife that were near extinction due to hunting and habitat degradation from humans. The revenue collected by the tax does not go to the U.S. Treasury. It winds up at the Department of the Interior, where the secretary distributes it to states based on a formula that takes into account the area of the state and the number of licensed hunters. The states have to match the funds they receive -- 75 to 25 -- and then use the revenue for the purposes prescribed above. As with excise taxes within the public health arena, the federal gun and ammunition tax has been successful in protecting wildlife and habitats.

Meanwhile, variations on gun and ammunition taxes are being introduced in a handful of states and localities -- most of them in the aftermath of the Sandy Hook tragedy. In California, for instance, there are at least two bills: One, courtesy of Assemblyman Roger Dickinson, calls for a 5-cent tax per bullet sold to expand a program that screens children for mental illness. The other, introduced by Assemblyman Rob Bonta, is a similar tax, but would aid law enforcement in cities with the highest violent crime rates.

In New Jersey, two Bergen County legislators have introduced legislation in the state assembly to impose an additional 5 percent sales tax on guns and ammunition. The money raised would go toward safety improvements at schools and other government buildings. The bill would raise the full sales tax on guns and ammunition from 7 percent to 12 percent.

In Florida, Rep. Linda Stewart is proposing a Safe School Trust Fund within the Department of Education. She wants it funded by taxes collected on Florida gun and ammo sales.

How these bills will fare in this legislative session remains to be seen. While most bills that target gun violence have been defeated in the past few years, Sandy Hook may prove to be a game changer -- at least that's what advocates of the gun-and-ammo taxes are hoping for.


You may use or reference this story with attribution and a link to
http://www.governing.com/columns/public-finance/col-guns-money-states-localities-taxes.html


If you enjoyed this post, subscribe for updates.

Comments



Add Your Comment

You are solely responsible for the content of your comments. GOVERNING reserves the right to remove comments that are considered profane, vulgar, obscene, factually inaccurate, off-topic, or considered a personal attack.

Comments must be fewer than 2000 characters.

Latest from Public Finance

  • Gun Taxes and State Revenues
  • A handful of states and localities are considering gun and ammunition taxes. Is there any state and local revenue in this approach?
  • The Muni Bond Market in 2013
  • Issuers may be enjoying low-interest rates when they come to market, but that doesn't mean these are the best of times.


Upcoming Webinars

  • It’s A Paperless, Paperless World..... Thinking Outside the Box to Gain Efficiencies through Prepaid Cards
  • April 23, 2013
  • Public sector organizations are under intense scrutiny to operate as efficiently and effectively as possible and with maximum transparency. An important consideration is the way in which payments are made and managed. Prepaid cards can offer flexibility, security and accountability to governments as a method of dispersing benefits, healthcare and social care payments, child benefits and housing benefits to their constituents.



© 2011 e.Republic, Inc. All Rights reserved.    |   Privacy Policy   |   Site Map