Image via Tax Foundation
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!”
“Taxes is proof that God loves us and wants us to be happy.”
— democrats
Once again, let’s look a little deeper, shall we? The Federal Excise tax on beer is 5 cents per 12 oz drink. Hardly a great burden imposed by Uncle Sam. The “40%” figure is quite erroneous. Not even in the ballpark. Unless you but some REAL CHEAP beer..at say…11 or 12 cents a glass. (I wish). The other “taxes” are what every business pays…income taxes, payroll taxes, etc. The other state taxes cannot be blamed on Uncle Sam. Blame Uncle Andy. So, the fact is that Uncle Sam (the federal government) puts a special 5 cents per 12 oz tax on a brew.
But wait…that is only for big breweries. For small breweries the federal excise tax is only 2 cents per 12 oz. They get a break.
But let’s dig deeper. The excise tax on beer has not been raised since 1991. Almost 25 years. And it is NOT a percentage tax, it is a per barrel tax. Why is that important? Because, adjusted for inflation, the $ 18.00 per barrel tax in 1991 would be about $64.00 per barrel today. Or about 20 cents per 12 oz serving today. In fact, by comparison the beer excise tax has been lowered in relation to all other taxes.
I am not sure what the beer industry is griping about. Just an example of manipulating statistics to show whatever they want too show. Wouldn’t it be ironic if the Congress, seeing how the beer industry has been paying a lower real tax rate all these years, decided to raise the excise tax ?
Gotta go. All this beer talk has made me thirsty.
Herein, not a single refutation of the fact that 40% of the cost of beer is taxes.
Why is it acceptable that 40%of the cost of anything comprised of taxes?
Well. Yes. The refutation is clear. The first inaccuracy of the blog says that 40% of the cost of a glass of beer goes to UNCLE SAM (the federal government) . False. The federal excise tax is only 5 cents per 12 oz. Minimal.
Second. Once again, those who pretend we have high taxes are playing fast and loose with data. For example, they include all the “assumed” taxes including state and local income taxes, unemployment tax, Social Security, etc. which everyone pays. Of course, all these awful taxes are returned to you…and the beer industry..in the form of great road systems which allow easy and safe delivery. Police protection which allows the business to operate without hiring very expensive security details. Insurance for workers if they get injured on the job. Etc. One of the great fallacies of the “my taxes are too high” folks is that they don’t seem to understand how they benefit from all the services provided by taxes. Perhaps a good cost-benefit analysis is in order.
Of course we all believe we “over pay” our taxes. But the beer industry does not. And neither do the hundreds of US corporations who pay no federal income tax. (Companies like Wells Fargo, Boeing, General Electric and Verizon are just a few examples). But that’s ok. Thanks to Congress you and I are taking up the slack.
Uncle Sam/Uncle Andy. OK. Non-issue. Everybody gets what I mean.
Your logic of more and more government services can be extended to ever-increasing tax rates. Why not tax everyone 90%? Leave the 10% to discretionary spending and have everything else “provided” by government?
Now, you’ll shoot back and say I’m advocating for 0% taxes. No, there are some services only government can provide, like military, national security, and the judicial system. So there is need for some minimal level of taxation.
Still, many government services can be equally or better provided by the private sector, such as private roads. Don’t forget that all of these great government services are paid for by the people, which means government is simply one avenue by which to pay for these services. Often, government monopolizes or crowds out private investment certain areas, so it’s hard to see how the private sector could actually provide what government does in an economical manner. For example, look at UPS/FedEx compared to UPS, or private space companies compared to NASA.
And the point remains: why should 40% of the cost of anything consist of taxes? When you look at it that way–when beer-guzzling college students look at the issue that way–perhaps they will begin to see the light.
Private roads? What are you talking about? Should every road be a toll road?
FedEx and UPS are not required to handle junk mail, are they? Nor will they deliver a letter across the nation for 50 cents. In other words, they are able to skim off the more lucrative aspects of delivery and not the more costly aspects. In addition, they avoided paying into the unemployment system for years by categorizing their work force as “contractors”.
Regarding “private space companies”. Are you kidding? The US taxpayer has spent billions of dollars (maybe more) developing space technologies. Going way back to the 1950s. Taking the risks necessary to develop the industry. Having some successes and learning from costly failures. Then, after the taxpayer has financed the basic research, taken the risks, developed an entirely new industry, only then does the “private sector” come in and take over. After the massively expensive research has been done on the taxpayer’s dime.
In fact, the very internet we all use was developed by “big government” with taxpayer dollars. No private investor had the ability to fiinance that undertaking.
I am curious. In what areas do you think government monopolizes or crowds out private investment? I see the opposite happening. The taxpayers take all the risks and “private enterprise” takes the result for free and profits from it. Nice work if you can get it.
A lot of foaming here, but that is expected, since this topic is about beer, and taxes.