From Sunday’s Washington Post:  New York "Crack Tax" Proposal Is Derided, by Keith B. Richburg:

If you can’t beat it, tax it. That seems to be the axiom in New York these days, where Gov. Eliot L. Spitzer (D), struggling to close a $4.4 billion budget gap, has proposed making drug dealers pay tax on their stashes of illegal drugs. The new tax would apply to cocaine, heroin and marijuana, and could be paid with pre-bought "tax stamps" affixed to the bags of dope.

Some critics in the legislature are asking what the governor has been smoking. "I guess if it moves, he’ll tax it," said Republican state Sen. Martin J. Golden, who dubbed the proposal "the crack tax." …

Taxing illegal drugs is more widespread than is generally known. At least 21 states have some form of tax for illicit drugs, although some of those laws have been challenged in courts, and others have fallen into disuse. Almost all the remaining drug-tax laws are used mainly by local law enforcement agencies as a way to seize drug money and fund counter-narcotics operations. …

Last September, a state appeals court ruled a drug law in Tennessee unconstitutional, saying that an illegal substance could not be taxed. In Massachusetts, that state’s supreme court in 1998 ruled a drug tax was an unconstitutional form of "double jeopardy," so it is not used, although it remains on the books.