Crack Taxes and the Dangers of Insidious Regulatory Taxes

Courts have long held the utmost respect for tax laws, reflecting a recognition that the revenue-raising function of taxes allows legislators to distribute the burden of funding the government as they see fit. Unelected judges, the sentiment goes, should thus be hesitant to trifle with tax laws. However, taxes are also used to regulate individual behavior, but in such cases, rather than protect individuals’ rights as they would in the case of direct regulations, courts continue to defer to the institutional interests in taxation. The problems with this approach are highlighted by state-level controlled substance taxes, which impose taxes on individuals engaging in the criminal possession and sale of illegal drugs without providing those individuals the protections of the criminal law. Courts need a new framework for determining the amount of deference such insidious regulatory taxes are owed in order to remove the incentive for legislators to utilize tax laws to skirt important legal protections for members of society, and this Article taps modern tax expenditure analysis to provide such a framework.