Opioid crisis cost US $26 billion in lost tax revenue: study
The opioid crisis cost the federal government $26 billion in lost tax revenue, and state governments $11.8 billion, between 2000 and 2016, according to a new study published in Medical Care.
The worst drug crisis in U.S. history -- which was responsible for the deaths of 70,000 Americans in 2017 alone, according to the Centers for Disease Control -- also has an indirect economic impact, a result of lost productivity due to premature mortality, underemployment, unemployment and incarceration, according to the study.
The study combined several data sources to estimate lost income and sales tax revenue due to the effect of opioid addiction on employment. According to an earlier study, labor force participation among prime-age adults fell by 1.55 percentage points between 2000 and 2015 because of the opioid crisis.
After extrapolating that number, the study then calculated a worker’s state and federal income tax liability based on TAXSIM, which examines a person’s income, marital status and number of dependents. The study also included the annual number of opioid-attributable deaths over the same period to determine the amount of lost income and sales tax revenue for each death.
“Estimating damages that are closely tied to opioid misuse is critical for determining what funds states, and potentially the federal government, may be able to recover in litigation,” authors Joel Segel, Yunfeng Shi, John Moran and Dennis Scanlon wrote in the study. “The estimates also have public health implications as damages paid to state or federal governments could potentially be allocated to opioid treatment and prevention efforts.”
As a result of the crisis, most states also lose sales tax revenue when workers leave the labor force and therefore buy less.
But the disparity is worse in some states than others. For one, the opioid crisis is worse in some states (like Pennsylvania, Kentucky and Ohio) than it is in others. Some states also don’t have a sales tax or income tax and therefore saw little affect on their tax income -- like New Hampshire, Texas and Florida.