S.471 - No Deductions for Marijuana Businesses Act (119th Congress)
Summary
S.471, the "No Deductions for Marijuana Businesses Act," aims to amend the Internal Revenue Code of 1986 to disallow tax deductions and credits for businesses involved in marijuana trafficking. The bill explicitly targets businesses engaged in trafficking marijuana, as defined in the Controlled Substances Act, and controlled substances prohibited by federal or state law. It seeks to maintain the existing prohibition on such deductions, reinforcing the federal stance against marijuana businesses despite evolving state laws.
Expected Effects
The primary effect of this bill, if enacted, would be to prevent marijuana businesses from deducting typical business expenses on their federal taxes. This would increase the tax burden on these businesses, potentially impacting their profitability and competitiveness. The bill could also create further discrepancies between federal and state laws regarding marijuana.
Potential Benefits
- Reinforces federal law against marijuana businesses, potentially deterring illegal activity.
- Could increase federal tax revenue by disallowing deductions.
- May discourage the expansion of the marijuana industry, aligning with federal prohibition.
- Potentially reduces the financial attractiveness of engaging in marijuana-related businesses.
- Supports law enforcement efforts against illegal drug trafficking.
Most Benefited Areas:
Potential Disadvantages
- Creates a competitive disadvantage for legal marijuana businesses compared to other industries.
- May incentivize businesses to operate in the black market to avoid taxes.
- Could lead to decreased tax compliance and increased tax evasion.
- May disproportionately affect small businesses in the marijuana industry.
- Exacerbates the conflict between federal and state marijuana laws, creating legal uncertainty.
Constitutional Alignment
The bill's constitutional alignment is complex. Congress has the power to tax and regulate commerce under Article I, Section 8. However, the Tenth Amendment reserves powers not delegated to the federal government to the states, and states have been legalizing marijuana. The bill doesn't directly violate any specific constitutional provision but raises questions about federal overreach into areas increasingly regulated by states.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).