Why ‘Poor Bloggers’ Shouldn’t Worry About A Booze Tax
Why ‘Poor Bloggers’ Shouldn’t Worry About A Booze Tax
The Senate Finance Committee (SFC) is considering partly funding health care reform with a booze tax. And while one of my Wonk Room colleagues calls the idea “plain bunk” because he is a “poor blogger,” my other colleague Matt Yglesias is a long-time booze tax enthusiast:
But what if we could raise some revenue by taxing something else? Like, say, cigarettes. Or soda. Or booze. Well, then the case for doing the taxing remains similar—you can fund useful programs with it. But the case against looks a lot weaker, since reducing consumption of cigarettes or soda is not so bad. You introducing a little bit of allocative distortion into the economy, but not a huge amount, and you’re improving public health which is going to be beneficial.
Indeed, the costs of alcohol use far exceed the revenue from existing alcohol taxes. In 2005, the federal government “pulled in about $8.9 billion from alcohol excise taxes.” By comparison, the economic and social costs of drinking burden “society with an estimated $184 billion per year in health care, criminal justice, social services, property damage, and loss of productivity expenses.” According to the Marin Institute, “annual health care expenditures for alcohol-related problems amount to $22.5 billion. The total cost of alcohol problems is $175.9 billion a year (compared to $114.2 billion for other drug problems and $137 billion for smoking)”:
- In comparison to moderate and non-drinkers, individuals with a history of heavy drinking have higher health care costs.
- Untreated alcohol problems waste an estimated $184.6 billion dollars per year in health care, business and criminal justice costs, and cause more than 100,000 deaths.
- Health care costs related to alcohol abuse are not limited to the user. Children of alcoholics who are admitted to the hospital average 62 percent more hospital days and 29 percent longer stays.
Currently, tax rates differ depending on the type of alcoholic beverage. This particular proposal would simplify the tax code by imposing “a rate of $16 per proof gallon on all alcoholic beverages.” As a result, “beer taxes would go up by 48 cents a six-pack, wine taxes would rise by 49 cents per bottle, and the tax on hard liquor would increase by 40 cents per fifth.”
How much revenue would this raise? Not enough to fully fund health care. According to a 2008 Congressional Budget Office report, “modestly increasing and reforming federal alcohol taxes could generate more than $28 billion in new revenue over five years. Resulting reductions in problem drinking would produce further significant savings in health care expenditures (for both the drinker and affected family members), and decreased law enforcement and other alcohol-related costs.”
Funding health care reform will require a mix of different revenue streams, but if the booze tax is seriously considered “poor bloggers” shouldn’t worry. According to the Center for Science in the Public Interest, since 80 percent of all alcohol consumers are moderate drinkers, they will pay “a negligible amount of alcohol taxes.” “Heavy and addicted drinkers, for instance – who account for most of the alcohol consumption in the U.S. – rightly pay most in taxes since their drinking imposes the greatest costs on society.” Here are the estimates:
- 35 percent of adults pay nothing at all.
- 80 percent of drinkers pay at most $26.50 per year, about 7¢ per day.
- Half of beer drinkers pay at most a penny a day.
- The heaviest drinkers (top 5%), who average some 11 beers per day, pay on average $215 a year, about 60¢ per day.
8 Responses to “Why ‘Poor Bloggers’ Shouldn’t Worry About A Booze Tax”
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Congress has no guts to tax corporations or the wealthy. Thus they press the fee and sin tax bar yet again.Sin taxes are tremendously regressive.
Addiction treatment would be a better use of the money, if the aim is to lower substance use.
When do addicts switch to an illegal drug, at what price point?
May 20th, 2009 at 7:05 pmIs this money going to go into a government system? Then, yeah! If it is going to subsidize a corporate profits in an ExtortionCare plan, than not on yer life.
May 20th, 2009 at 8:00 pmQuite frankly this tax isn’t an issue for people who drink; it’s a concern for people who make the beer. I’m a reliably democratic voter and a secular liberal, but on the issue of “vice taxes” you guys drive me nuts.
I’m a small brewer, brewing beer on a 10 barrel system 3 times a week. Depending on which recipe I’m making this will raise my per brew costs by anywhere from $223.20 for my 4.5% lager to $456.32 for my 9.2% specialty ale. This might not seem like much to you, but last month I would have had to pay an additional $3571.20 in federal vice taxes. That’s nearly a month’s rent for the building I’m in, and while I’ll be able to survive I’ll have to cut my own take-home pay so I don’t have to resort to firing one of my cellar workers.
So go ahead and pretend it’s a minor tax. The market’s not that elastic for beer and this will definitely hurt the nation’s small brewers and vintners, if not drive some of them out of business all together.
May 21st, 2009 at 9:53 amIt’s 8 cents a beer.
We’re supposed to believe 8 cents a beer is the end of the world? A budget-busting expense? Have we lost our minds?
May 21st, 2009 at 10:16 amAs I’ve already stated this isn’t 8 cents a beer, it’s a tax based upon the percentage of alcohol in the beer. But then I take it you’ve got an additional $42 grand lying around you can hand to the government every year too, eh? I mean it’s just pocket change from all the dirty drunks, right?
May 21st, 2009 at 10:21 amSounds like a regressive tax to me. Can’t say I know any 11+ beers a day drinkers that are doing well financially. However I do know some that drink that much and can’t reasonably support their children.
Also Yglesias is poor???
This post sounds extremely out of touch with reality.
May 21st, 2009 at 10:46 amHmmm… seems I need to make a correction, sorry about that folks. That’s 20 bbl, not 10 bbl. Must have pressed the wrong button and not noticed.
May 21st, 2009 at 10:49 amIts a regressive tax targeted to a minority of the population. Its an excise tax, which discourages producers from job creation. Costs are not so minimal, as excise taxes can triple after wholesaler, distributer, and retailer markups. If it is supposed to fund the health costs of alcohol consumption (which it will not) let’s be fair and excise tax all junk food (chips, candy, soda, chocolate, cakes, pies, etc.), fast food chains, many/all restaurants, especially breakfast joints, since obesity is rampant, and a more severe killer and strain on the medical system.
I enjoy Matt Yglesia’s comments, but he has missed the boat here. Does he actually think a 270 lb soft drinker is going to stop drinking his Pepsi if it is taxed more? Sorry, just like I enjoy my beer after a hard days work, which is already taxed by up to 50% by current state and federal taxes, I will continue to imbibe, and I pay all my health care costs. Where’s the justice?
May 23rd, 2009 at 4:33 pm