Next time you sip or chug a beer make sure to make a big toast to Uncle Sam because 40% of what you paid for that beer is going straight to him.
That’s right. Out of every dollar you shell out for beer, on average forty cents is going to state and federal governments. The tax burden is comprised of state excise taxes, state sales tax, state business taxes, federal excise taxes, and federal business taxes.
In fact, taxes are the most expensive ingredient in beer, according to the Beer Institute, an industry lobbying group. They cost more than labor and raw materials combined. In fact, this same group points out that since state taxes are based on the price of beer after being federally taxed, beer consumers are actually paying “a tax on a tax.”
Sobering up yet?
In New York, those of age pay $0.14 per gallon of beer, which is actually pretty cheap. According to the Tax Foundation, New York has the 39th lowest beer excise tax.
The Beer Institute is reportedly lobbying Congress to pass a bill called the BEER Act, which would half federal excise taxes on large breweries back to the rate in 1990 and reduce taxes further for smaller breweries. The group argues that reduced taxes would lead to an expansion in smaller breweries and growth for larger ones, like Anheuser-Busch and MillerCoors. In a report titled “Beer Tax Facts” the group argues that taxes on beer are regressive, calling them among the most “discriminatory of all taxes.”
However, the Congressional Budget Office and numerous academic researchers want to keep the tax regime as is, or even increase beer taxes. They argue higher beer costs reduce the medical and social costs of alcoholism, drunk driving, and alcohol abuse in general, with data, for example, showing lower rates of death from liver cirrhosis when alcohol prices rise.
The Beer Institute counters back arguing “people can’t be taxed into responsible behavior.” The group also writes that many studies regarding the “social costs” of increased beer drinking are flawed, such as the calculation of lost productivity when someone dies prematurely due to alcohol abuse. Furthermore, the group questions why research shows increasing social costs of alcohol over the past 20 years “at a time when major indicators of alcohol abuse have greatly declined, to levels that are now at or near historic lows.”
Either way, the Washington Posts’s Wonkblog article “The deadly consequences of a cut in the beer tax” linked to earlier is a rather disturbing read. Obviously, the Beer Institute intends to defend the brewery industry, but the university professors and researchers featured in the WaPo piece do not attempt to hide the fact that they view their findings as justification for passing laws which control other peoples’ lives. This is one of the major problems of modern day government and academia–policy wonks, legislators, and regulators are often intoxicated with a hero complex and fancy themselves social engineers, whose boundless brilliance justifies the existence of laws and regulations designed to control or manipulate how other people lead their own lives.
This is not to say that research and policy analysis is unimportant or misguided. They are very important, but policy-making should not be predicated on the desire to control how people live–the planned society utopia cannot exist, though a few 20th century totalitarian states got close.
Instead, any policy analysis that is used to persuade legislators, no matter how rigorous, should be framed within or accompanied by a legal and Constitutional context. If not, legislators and regulators will craft new laws and taxes.
And that is why the federal tax code today is 74,608 pages, or 3.8 million words, long. All of Shakespeare’s works amount to about 884,647 words. It is 187 times longer than it was a century ago, and has tripled in the past three decades. Obamacare alone has added 3000 pages. The Washington Examiner writes that the tax code will pass 100,000 pages by 2050 if it continues to grow at the same pace it did this past century.
So join me in saying to unnecessary taxes and all the politicians who vote to raise them: “Farewell, fair cruelty!”