Taxing beer to Death

If you can't outlaw beer, you might as well tax it to death.

Just when it looks like Prohibition was dead, with a stake firmly planted in its miserable little heart, you get a surprise. The evil impulse to spoil someone else’s fun has reappeared-this time in the form of a proposal for a twenty-fold increase in taxes on beer in the otherwise brew-friendly state of Oregon.
The arguments there are pretty familiar:
•Increasing the tax will reduce underage drinking. Will it? Studies show that most teenagers who drink are drinking wine and distilled spirits.
•Oregon’s low taxes and large number of breweries creates a climate that encourages adults to tolerate underage drinking. But Oregon, with taxes that are almost the lowest in the nation has a rate of underage drinking that’s about the same as the national average.
•Higher beer taxes can support more alcohol and drug education and treatment. Perhaps they can, but beer drinkers are not responsible for all the abuse of other substances that cause social problems. Is it time for a tax on previously illegal narcotics? Household cleaners? Aerosols? Prescription pain-relievers and other psychoactives?

Picking beer for a tax hike is easy because beer is easy to pick on. In 1990, Congress raised taxes on ‘luxuries’ like limos, fur coats, jewelry, yachts, and private ‘planes. The same legislation doubled the federal beer tax. This drastic increase is estimated to have cost more than 60,000 jobs in breweries and related industries. Lobbyists for special interests were able to get all of these taxes repealed-but the one on beer remains. The tax component of the cost of a glass of beer now averages 40%. Direct excise taxes amount to somewhat less, amounting to a national average of about 70 cents per gallon.

In case you haven’t noticed, that money hasn’t supported any particularly effective drug policies. What may be more to the point is that at a time when the Senate has just passed a law rolling back the taxes on inherited fortunes of over $3million dollars, posting a ‘luxury’ tax on beer is penalizing the wrong people.

A look at the Consumer Expenditure Survey shows that beer taxes are regressive, costing lower- and middle-income taxpayers many times more than those in the middle-income range. They are also pretty reliable job-killers.

(Legislation to return federal beer taxes to previous levels and provide a minor assist to medium-sized brewers has been introduced to Congress as S. 1995 by Senator Ken Salazar (D-Co) and H.R 1610 by Congressmen Earl Pomeroy (D-N.D.) and Phil English (R-Pa).)

So what’s behind the move in Oregon? Culturally, it’s a long story, but the tag line is the same: it used to be easy to pick on beer as the sinful pleasure of the least powerful people. Some people think it still is. If you’re one of the people who wants to make beer a better-defended target, this might be a good time to call your representative in Congress.

For more on Beer and Its Enemies, may I humbly suggest:

http://www.amazon.com/gp/product/1601641915