Colorado has collected so much money from marijuana sales tax that it may have to give some money back! See link below http://mic.com/articles/109764/marijuana-is-making-colorado-so-much-money-the-state-has-to-give-some-back
Wow! This does not happen often and here is the one million dollar question.
What should we do with the excess tax revenue?
1. Give back to the tax payers. This makes sense given that the individuals know what is best for them and therefore would use the money most wisely. Classical economics.
2. Use for public goods such as schooling. This proposition makes sense but given that governments are not so good at using money effectively, well, we will hope for the best.
3. Pay down debt. Colorado has an estimated $57 debt and an interest rate of about 4%. Although the interest payment is low, it may be a good idea to pay down debt. States can run on debt for a long time (e.g. California) but as good financial advisors suggests pay down debt first because interest compounds quickly.
Overall, it is great that Colorado has extra revenues and I hope that they use that money wisely :D
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