Does taxation lead government spending? Or is it the other way? Or are they somehow synchronized? The question and the data are tantalizing. This study uses U.S. data to find mutual causation.
But what do politicians do when there are windfall revenues? Mostly it is not good. There is even a technical name, the natural resource curse.
Colorado pot legalization advocates are today cheering that the State has garnered an extra $3.5-million in the first month of legal pot sales in that state.
Regardless of what one thinks of legalization, think about what the "windfall" means. This new pot spending is not new wealth. It is diverted from other spending. If the diversion is away from gangsters, great. But we should not assume that all of the money being spent on legal pot is from that source. Some, for example, may have been at the expense of donations to worthy causes or spending at fine and upstanding businesses.
Will the new money going to Colorado State coffers necessarily go to "good causes"? Will any of it pay for new pension promises or new highways, bridges, trains, airports to nowhere? What do you think?