Saturday, May 30, 2009

All this talk of taxes

There are a lot of proposals for beer tax increases in the air right now -- federal, state, and local; here in the U.S. and in Europe. The worldwide recession has not just affected people and private industries, it's -- gasp! -- cut government tax revenues. Luckily, governments are the one enterprise that can increase their revenues by simply taking more money from other people. Yay!

One of the ways they do that are by excise taxes, taxes imposed on particular products or services that the government picks, seemingly at random: tanning booth sessions, for instance, or tires. There is a sub-class of excise taxes, commonly referred to as "sin taxes," that purport to try to help people not partake in behavior or consumption that is thought to be bad for them, or, worse, immoral. These include, of course -- of course! -- beer taxes.

The current argument for increasing beer taxes goes like this:
  • We need increased tax revenues to pay for all the wonderful government programs.
  • Beer taxes haven't been raised in X years (admittedly, quite a while...and can you give me a good reason why they should have been?)
  • We should raise beer taxes because that would serve the twin purposes of 1)raising revenue needed for wonderful government programs that benefit everyone; and 2)encourage people to drink less, because higher taxes mean people drink less.
Allow me to shoot some holes in this.

First, it's damned near immoral to raise taxes in a deep recession. At some point, especially with excise taxes, you're taking money away from people who don't have enough to give it to people who don't have enough (while stripping away enough to continue paying the wages of the government employees who administer the programs).

Second, if the government programs truly are wonderful and benefit everyone...grow (or borrow) a pair and tax everyone fairly (and progressively). Don't put it on the back of moderate drinkers like me whose only 'sin' is to enjoy a beer.

Finally... I'm already buying beer that costs more than 90% of the beer sold in this country. The beer I buy costs almost twice as much a case as the popular beers do. What purpose will increasing the cost of every beer sold serve when the people who buy the more expensive beers are already paying that much and more? Simple: it's about raising revenues, not moderating behavior. And at that point, sweetie, you should be talking income or sales tax, or I should be voting your thieving, lying ass out of office.

An increase in the beer tax will fall most heavily on more expensive beers. Craft beers. Imported beers. Specialty beers. The beers you probably drink, if you're reading this blog.

So why aren't you doing anything about it? E-mailing your representatives is easy as hell these days: go to Congress.org, put in your ZIP code, and you can hit your Senators, Congresscritter, and state reps with one easy shot. Do it. Tell them you do not want to see an increase in the beer tax. Tell them that you would rather see cuts in spending or fair, across-the-board tax increases before you'd want to see any kind of sin taxes or excise taxes. Tell them you don't mind paying your FAIR share of taxes, but that voting for unfair taxes will cost them your support.

Hell, start a petition at your local bar or beer store. Get freakin' militant. It's your money they're after. And don’t be one of those sniveling warts who join in their own punishment: “Oh, sure, I guess I can pay a nickel a six-pack more. I probably shouldn’t drink so much anyway.”

You pay enough already for the sin of working at your annoying job. You do NOT have to pay more to have a beer when that 8-hour shift in hell is over. Be a man, defend your beer from the pasty-faced safety Nazis and morality police who want to tax it right out of your hands. The price of beer freedom is eternal vigilance.

19 comments:

Anonymous said...

While I agree with most of what you said, isn't the excise tax by volume ($ per barrel)? The quality and price of the beer does not play a large role in the amount of tax.

Have your readers support the BEER Act (H.R. 836). It proposes to lower the federal beer excise tax to the pre 1991 level of $9 per barrel for large brewers and $3.50 for small brewers. This is a tax break for most premium beers, at least at the federal level.

Kevin said...

AMEN Lew! A case of St. Bernardus ABT12 24 bottles costs $92 along with Chimay. Please don't make me pay more in taxes because I enjoy better beers. I can't help that I don't partake in the ritual of drinking crap beer. Tax the Miller and Bud drinkers!!!

Lew Bryson said...

The excise tax is by volume. That's exactly why the price does play a role if it's supposed to be about moderating drinking: the more expensive beers are already at a much higher cost, too high to be of interest to the 'industrial' problem drinker. There's no "safety" point in raising the price. What increasing the price will do is drive people away from purchasing those higher-priced beers.

The BEER Act is a dead issue, I'm afraid. They've been trying to get this passed in other forms for years, and it goes nowhere (while the other tax increases enacted at the same time -- yachts, luxury cars, etc. -- have all been repealed)...and now the Obamans have seized on booze tax increases to pay for health care. I'd rather put all my energies into stopping tax increases at this point, rather than the fairy tale appeal of lowering them.

Lew Bryson said...

But no, Kevin: tax everyone, or don't tax anyone. I don't want to see any group singled out. It's everyone's government, and everyone -- everyone who can -- has to pay for it. Simple. Fair. And apparently impossible.

Alan said...

Sorry, I am not a beer libertarian or really the beer anarchist you seem to be. Beer is part of society and, generally, we should tax that which we can maximize revenue upon while not inhibiting consumption. For what ever reason beer taxation does not stop beer from being bought as much as with other things. So you want a road, a school or, as with us up here, universal health care, you should want to be taxed and realize beer is likely a good source of tax. But in a overall scheme of sensible taxation. I am most pissed that the general Federal sales tax in Canada was dropped recently from 7% to 5% meaning that we now have a 50 billion dollar deficit but gave up 12 billion in Federal revenue.

But I take your point on exceptions for certain classes of brewery - and that is being done here in Canada with the small brewers getting a Federal excise tax break. It is also a sliding scale so you don't get into the contortions where we are trying to ensure Sam Adams gets the same tax break than a one brewer operation does.

Still, going for a Federal excise tax that in real dollars is 62.5% of what it was in 1952 shouldn't be that much of a crime against humanity, should it?

Lew Bryson said...

Alan,
Tax income. The only reason government can't get as much money as it needs from personal and corporate income is a lack of political will. Excise is just a bad idea. I'm not against taxes. I'm against excise taxes. Hit me with a toll for roads -- the government provides the roads, and tolls are pretty directly levied on those who use them -- hit me with fees for other things like roads. But why is beer taxed with a special little tax? Are you telling me that if the government taxed, what, bacon that would be okay as long as people kept eating it and paying the tax? A tax on beer makes no more sense than a tax on bacon. So why tax bacon or beer? Tax income, tax all transactions, tax capital gains: in short, tax money.

Sorry, Alan. I don't see any good reason to tax beer at all. And saying that we should raise the tax on beer simply because it isn't high enough makes no more sense than taxing it in the first place.

Kevin said...

Ahh. I see where you're coming from. Why now with the tax??

Alan said...

Look, this is one of these "not my country" questions so bear that in mind. You need to live in your culture and it is simply different from here so I am not saying that you are wrong. That being said, consider this:

- special taxation of beer goes back to the medieval period. It is sorta cool that it still gets the special treatment and consumption is not inhibit. It is part of what makes the beer economy so interesting.

- I agree that true craft beer should get an exemption that commodity beer does not. In that sense commodity beer is an industrial product like gasoline that can take a heavy tax. But no brewery that makes 2,000,000 barrels of beer is a craft brewery. Are any that brew over 100,000?

- home brewing supplies are not taxed. If you really need great beer, make it yourself. That is what I did when I lived in PEI and I made some pretty awesome ales and also got pretty fat.

- there is a health reason to attempt to temper the consumption of alcohol whether we beer fans are comfortable with that or not. So if we are a society with state health care, why not make them pay the piper. Similarly, I would have no problem with a $1,000 surcharge on 50 buck license renewals for convicted drunk drivers.

But, as I said, I am a socialist in a socialist land. So are 90% Canadians compared to Americans. Our Federal Conservative Party government is far to the left of Obama and can't get more than 33% popular support. If I am a socialist, I want to be taxed and want to be taxed in ways that I can understand and which give me some choice. So cigarettes should be taxes like hell. And if we tax commodity beer but not home brewing supplies, well, that is an interesting compromise. But if we raise tax on beer 10% consumption will just not drop. It can take the tax and maybe it will, like having families, force us to actually go make more income than cut back elsewhere. That is the nutty thing about fine beer is that I will chase it and spend more than maybe I should in the chase - thank God I have ad revenue, frankly.

Lew Bryson said...

Alan,
You're completely missing some of my points. First, we don't agree that there should be an exemption for small brewers. I don't think there should any beer tax at all, so I can't want any exemptions.
Second, you said in your own post (http://beerblog.genx40.com/archive/2009/may/butisnttaxing) that
"We [Canadians] are also progressive taxers. Those with money pay more. The everybody pays the same approach is ultimately regressive and attacks those with less unfairly." Aren't excise taxes by their very nature 'everybody pays the same' taxes? Excise taxes are regressive, and that's one of the reasons I despise them. I'm truly surprised that you don't get that.

Your health reasons to temper the consumption? The World Health Organization found alcohol consumption to be pretty much a wash on costs: the estimated costs of overconsumption were almost exactly the same amount as the benefits of moderate consumption. Not a popular finding, perhaps, because it shoots the legs out of revenue plans? But it's still there. And if you're going to beg for a system of taxation that offers you choices...Why not choose to drink less? We both want to make choices, it seems; what makes your choices more moral, better, or civic than mine?

I am not anti-tax, although you and Uncle Jack continually try to paint me as a mad Randite libertarian. I am dead-set against unfair taxation. I'll pay my fair share. I just vehemently disagree that drinking beer in moderation makes me liable for a larger share of taxes. What's more, the idea that it makes non-drinkers liable for less taxes doesn't seem fair either.

Tax money, not beer.

Alan said...

I never pained you as a Randian libertarian!!! I have Randian libertarians in my blogging circle for that. ;-) I place a large distance between libertarians and Randians. I don't write comments at Randian places for fear that they will send their weirdos around.

My real point is that beer taxes actually work as taxes and even if they are unfair people act like ants when it comes to beer purchases. It doesn't mean people are ants just that they have an extremely elastic approach to beer purchasing - like, say, salt. I am personally more concerned about beer snobbery and the "beer is the new wine" mindset than taxation as a matter that places fine beer beyond my price point.

Steven said...

Jeeze -- Leinekugel is already at $7.50 a sixpack at the cheaper spots around me (north of Chi, still in Illinois), I can't imagine extra taxes added to my beverage of choice.

I think I will see if my local(s) will start a petition drive on this Lew, or else I'm gonna buy all my beer in Wisconsin from now on. They can't tax beer... can they?

Lew Bryson said...

There's been a lot of talk about raising the beer tax in Wisconsin, Steven, but...I can't help thinking it's gonna take a lot more than talk to raise the beer tax in Wisconsin.

BRANDON said...

Amen, Lew. Amen.

sam k said...

I would hope the same could be said of Pennsylvania.

21stCenturyCavePainter said...

Deval Patrick wants a 5% tax on beer in MA. This will make me more discriminating when I am choosing how I spend my money on beer. I will certainly be homebrewing more often.

I think this is bad news for local businesses.

Brad said...

A fine call to arms, Lew. I e-mailed my congresspersons.

Incidentally, it seems to me the twin goals of sin taxes (to raise revenue and discourage consumption) are actually incompatible, unless one is able to identify that sweet spot where the tax is high enough to make up for reduced sales. How high does that tax have to be? Of course, it's a sliding scale, but I doubt the representatives who conceive these hikes are considering this question.

geoffrobinson said...

The root problem is that the government can never have enough and lacks the political will to cut spending. They feel like everything you have is theirs. Just be thankful they don't take it all.

When you ask them to cut spending, they'll respond with threatening to cut police, fire fighters, and the drowning of puppies first.

Then they pick on one thing at a time. Divide and conquer. That's why Lew's tax everyone if its worthwhile point is really good. No divide and conquer.

I would like a flat tax which exempts the first 20 or 30 K of income.

Tim said...

Nate Silver has an interesting take on raising alcohol taxes: tax drunk drivers.

I particularly appreciate his point that "[undesirable] behaviors aren't particularly strongly associated with drinking unto itself. They are associated, rather, with drinking to excess and/or engaging in other, particularly stupid sorts of behaviors while doing so. I know the evidence on this is mixed, but many studies have suggested that moderate alcohol consumption is in fact associated with improved health outcomes -- especially if you're drinking red wine and especially if you're a guy. A person who has a couple of drinks a couple of days a week, and who never drives or has the compulsion to engage in violence while doing so, imposes virtually no negative consequences either on himself or on society. Drinking doesn't cause negative externalities in the same way that, say, driving (traffic congestion and pollution) or smoking (second-hand smoke) intrinsically do."

Lew Bryson said...

Only problem with bumping up the penalties on drunk driving -- and this isn't speculation, it's observed -- is that if they go high enough, police and the courts may have a tendency not to enforce as much as they might. Not right, but things happen.