Let's beat up Dick Yuengling again!

Saw this...blather on PhillyMag's blog today, and just lost it. Gene Marks, a business consultant who writes...a lot, decided that he was going to take Dick Yuengling to task for something The Dickster said in a recent interview. Here's what Dick said about why he may or may not open an expansion brewery in western Pennsylvania:

“Some states are very economically friendly,” Yuengling said. “We don’t necessarily base business decisions on incentives like that. But if they are going to give them to somebody, we would stand there and take them.”
“Pennsylvania is a great location. But it’s not very business-friendly. You look for fair tax breaks, fair taxation. And the bottom line is more jobs. That’s what it’s all about.”

And Marks jumped all over him for it, mainly making the point that Yuengling -- because he mentioned that he might locate a new brewery in another state -- is just another entitled grabber, sticking out his hand for something he doesn't deserve.

So can we all admit that we’re the same? The unions. The small-business owners. The down-and-out workers. The big business executives. The 99 percent. In the end, we’re all trying to negotiate the best deal we can, regardless of the effects elsewhere. We’re all going to take it if we can get it. Whether we’re entitled to it or not.

Marks clearly doesn't know Dick. This is the last person to think he's NOT 'all the same.' He drives a well-used Ford. He wears jeans and flannel shirts. He still has his office in the 1831 building that houses the brewery, in Pottsville. He chainsmokes, and uses a coffee cup for an ashtray. He's folks.

I'm so tired of this being beaten to death for political reasons, because this is about the election. Did you miss that "99 percent," didja know Dick's a Republican? Can we put that crap aside just once before November? Dick Yuengling kept jobs in Pennsylvania when other breweries in the state were closing. He added jobs in Pennsylvania when he built his new brewery here. And now he needs to expand, and he says that he may not build another brewery here...and now he's evil.

Give me a break. This man's business decisions saved America's oldest brewery, gave union workers in Florida back their jobs (when Yuengling re-opened the Stroh brewery in Tampa, which went under because of bad business decisions), and made this the biggest American-owned brewery in 2012. I'm sorry; if the man wants to open a brewery somewhere else -- New England, maybe, or the Midwest -- that's his prerogative. It's his business, it's not a corporation. He can do whatever he wants with it.

And you know what? Doing just that -- whatever he wants with it -- has worked out really, REALLY well for his employees, for the thousands of people in PA who sell Yuengling, and for the residents of Pottsville. I'd say let him keep doing what he's doing.

Have New York craft brewers (and drinkers) been 'shelted'?

"Shelted" is a word Canadian blogger Alan "A Good Beer Blog" McLeod made up three years ago, and from the context, I'm guessing it means "being asked to pay a premium price for a beer imported by Shelton Brothers." (Alan's a bit obsessive on price/value in beer, and the Shelton line is not noted for being underpriced. Update: turns out it's quite a bit more than that, if you'd like to have a look, and thanks to Alan for explaining. ) Or maybe something similar, but vaguely more crude; you can do the interpretation. Anyway, Alan tweeted this today:

"Once or twice I have used the word "shelted." All of New York may now know the feeling." 

The link goes to a New York Post story about a new interpretation on New York taxes and fees that were no longer being applied to small in-state brewers, thanks to the outcome of a lawsuit brought by Shelton Brothers, whose beers were liable for the taxes and fees. Quoting from Russia Today (sorry, RT.com...), here's the story in more detail than the Post explained:

Until recently, the first 200,000 barrels of beer produced by a company within New York were exempt from taxes that were imposed on other ale importers. Starting immediately, however, those small-time brewers who only produce a limited number of delicious nectar each year will be taxed on each and every barrel — to the tune of $4.34 apiece.Additionally, brewers in New York that produce fewer than 1,500 barrels will now be forced to pay a $150 label registration fee. 

First, label registration fees are bullshit, and shouldn't even exist; if they do, there should be some kind of blanket fee for multiple labels. The state should be ashamed for charging these; they're like points on a mortgage; just a fee the state charges because it can.

But the taxes? $4.34 a barrel is 14 cents a gallon, hardly one of the big state excise taxes, but it amounts to a lot of money for a small brewer. A brewer making 5,000 barrels a year will pay an additional $21,700 to New York; a hefty, unplanned chunk. Apparently New York City imposes an additional 12 cents a gallon (shocker, right?), so you're getting into real money here.

But let's take it in a different direction. The Post asked around -- maybe, they're not clear about who they actually asked -- and got this: "It wasn’t clear how much more consumers will pay, but industry workers predicted that the cost of a local beer will rise at least $1 for every pint."

Really? If that's true, then the addition of  26 cents a gallon in tax, which means the brewer is paying an additional 3.25 cents a pint, is going to cost consumers eight friggin' dollars. Which, my friends, is yet another reason why excise taxes are stupid and regressive. You're getting hosed, the state's not even making that much money, and the three-tier system's raking it off. Hell, they're mad at Shelton Brothers? They ought to build them a statue.


But the main point here is this: should New York beer drinkers be pissed at Shelton Brothers for increasing the price of their beer? Or were the brothers Shelton simply getting justice after getting burned by paying taxes New York brewers didn't have to pay? I would say that this is a 21st Amendment issue. If New York wants to charge different taxes on alcohol producers in-state, well, the 21st Amendment gives them the right to do that. And if not, and that means New Yorkers have to pay too much for a glass of beer, they need to tell their legislature that the beer excise tax is too damned high.

But it's the court's fault, and ultimately the law's fault, not Shelton Brothers'. This is not a level playing field, and the laws make it that way. We win by fighting the laws, not each other. Until then, I can't fault a brewer or importer for trying to level things out through the courts.

Follow-up on beer tax relief ("the subsidy")

From the Seattle PI "Washington Beer Blog," this bit of support for the federal tax relief Joseph DiStefano was defaming (and misunderstanding) recently:

The estimated cost of the provision is about $44 million per year and less than $500 million over 10 years. A Harvard study of the Economic Impact of H.R. 4278 indicates that the bill would generate more than 2,700 new jobs over the first year to 18 months, followed by an average of 375 new jobs per year over the following 4 years. Each new job would cost less than $4,000 in foregone government revenue in 2010. According to the study, "Economic activity would increase by $10.91 per dollar lost in government revenue, making the bill an efficient use of government funds."

Sounds pretty damned good, doesn't it? And these are going concerns that are showing steady growth in a mature industry. Still some risk, but...that's damned near money in the bank. If the economy does double-dip, as fears are growing, maybe a different story, but it's going to be a different story for a lot of businesses, and why would you want high taxes on business in a recession anyway? Do this thing. And you, reader, tell your senators you'd like to see this happen.

The Dead Hand of Jim Bell...

No, Jim Bell isn't really dead; at least, not so far as I know. But his Frankenstein monster, Red Bell Brewing, continues to haunt Philadelphia brewing. Witness this misreasoned claptrap from the usually eruditer-than-this Joseph DiStefano, titled Beer Will Save America! Funny. DiStefano is bringing up the proposal by Senators John Kerry (D-Mass.), Mike Crapo (R-Idaho), Ron Wyden (D-Ore.), and Susan Collins (R-Maine) to lower the federal tax on craft beer. Kerry says it will create jobs (it will), Jim Koch of Boston Beer points out that craft brewing is one of the few success stories in the recession (it sure as hell is), and the Wall Street Journal says the tax cut will help the craft brewing industry (well, duh).

But DiStefano says "We've been this way before." He opens up the Scary Closet and brings out the shaggy boogiemen of Red Bell and Independence (and not even the right Independence, you big dope; that link goes to the closed brewpub) as being "among the many beermakers backed by the taxpayer-subsidized U.S. Small Business Administration in the late 1990s; both also sold shares to the general public; both are among the many investor- and taxpayer-subsidized brands that flopped."

Well, imagine that: there are businesses that sold stock and went under. That couldn't have anything to do with how the Inquirer sucked up to Jim Bell and printed any damned bullshit he sent them, could it? As far as that goes, "investor-subsidized"? What the hell's that? The shareholders made an investment, they took a risk. If they'd gotten bailed out, that would have been a subsidy. But small brewers don't get bailed out, they just close.

But the main point? This isn't even a subsidy! The Feds raised the beer tax back in 1991, the senators want to roll that back -- like every other part of the 1991 tax increase, like the luxury tax on yachts that somehow got repealed... -- they're not going to SPEND money on this 'stimulus package,' the brewers are going to do that. 

Then he gets silly: "What's the big deal with small-batch beers? Yes, they probably taste better. Yes, they're definitely winning market share from Bud and Miller and Coors over the years. So much that the giants have been closing and consolidating plants and selling out to foreign owners."

Okay, no. Much as this thought leads beer geeks to turn off the lights and fondle themselves in front of the gently glowing screen of a computer locked on ratebeer.com, it's simply not true. The "small-batch beers" just are not selling enough to have caused the "selling out to foreign owners." The big guys have been consolidating to save costs and boost market share, and right now it's the foreigners turn to buy. It's got nothing to do with craft beer, which is still under 5% of the market. You want to point a finger, point it at Corona and Heineken, which have taken three times the share away from the big brewers. So DiStefano is either ignorant, or misleading you. Take your pick.

It's the conclusion that's the kicker, though: "But does that really add up to more and better jobs that merit public subsidies?" Well, yes, it does add up to more jobs. Period. Give craft brewers a tax break, and I guarantee, they will SPEND that money on new hires, on better benefits for the workers they do have, on solid industrial equipment, on advertising and promotions. They won't squirrel it away in a tax break somewhere, or send it overseas. Which, I would think, would be a GREAT way to get an effective stimulus activity out of...wait, that's right, it's NOT a public subsidy! That would be if the government GAVE THEM MONEY. But we're not even talking about giving them money, we're just talking about TAKING LESS AWAY FROM THEM.

Am I wrong? Is it really a "public subsidy" when you cut back on an excise tax that shouldn't even be there in the first place? Or is this just one more example of how the brewing industry (and the spirits and wine biz) is treated unfairly because everyone is scared to death of alcohol? I'll tell you what, Mister DiStefano, I would much rather see taxes ratcheted back on a growing, thriving production industry than see government funds given to the banking industry. How about that, fella?

Should Maryland raise its beer tax?

I think you know how I feel about that question. But the Baltimore Sun wants to know what people think about the idea and has a no-registration-needed poll here. Go vote!

"DUH!" of the Week...

Check out this headline from the BBC:

Heavy drinkers seek out bargains

This study found that people who drink heavily bought cheap booze: vodka, mostly but "White cider is the beverage to which our patients appear to have particularly cheap access, along with whisky." (Really? Whisky? Why the hell is whisky cheap? It's because distillers dump it to 'own brand' schemes in stores for quick cash; incredibly short-sighted, because it keeps the price of better whisky down as well).

Did anyone really think most drunks -- all the people surveyed were being treated for alcohol problems -- bought high-end booze-o? Heck no! These are the folks who skew the numbers, the 20% that consumer 80%, and they buy the cheapest buzz they can get, something the UK government has made even easier by mandating "units" of alcohol per bottle/serving being shown. Makes it easier for the drunk to spot the bargain, y'know?

So the study is supporting the government's latest plan, which goes beyond raising the UK's already stiff drink taxes: minimum booze pricing. Raise the price per unit to a higher minimum price. Wonder who pockets the difference? Bet it's not the booze producers...

Reason speaks truth to power about beer and STDs

"Beer Raped Your Daughter and Gave Her Gonorrhea. Again" is the provocative title of Reason's latest post about the junk science that goes on in the fight against booze. Briefly? The booze-haters are trying to tell us that a 3 cent tax increase per bottle of beer would cause 'youth gonorrhea' to drop by 9%, something that a Washington Post story picked up from a 2000 study done by the CDC that's been widely criticized -- actually 'laughed at' would be better than 'criticized.' Reason points out that this is ridiculous, quoting the Post from a story they ran back in 2000 making fun of this very study!

The Post had the good sense to ask David Murray of the Statistical Assessment Service, a non-profit think tank in D.C., about the study. STATS does yeoman's work pointing out the junk reasoning at the root of so much junk science. This one was a high, hanging curve for Murray, who said the CDC's thinking was on the level of "the sun goes down because we turn on the street lights."

I love that phrase. As someone pointed out in the comments, how is it that a tax can be both inconsequential -- "We're only going to increase the price by three cents! You can afford that!" -- and amazingly effective against 'youth gonorrhea' at the same time? How? I think we already know that.

Liquor Taxes & Santa Claus

From today's Chicago Tribune:

The increases on thousands of products, timed to coincide with the Sept. 1 tax hike, sometimes are double or more the increase in the liquor levy alone. It may take a few weeks or months, but the higher prices now faced by liquor retailers should eventually translate into sharply higher costs for everybody from fussy wine snobs to besotted tipplers. Separately, the nation's largest brewers have also signaled plans to raise beer prices this fall.
Voters are primed to blame politicians for almost anything, so piggybacking price hikes on tax increases is a tried-and-true business technique for deflecting consumer ire over rising costs. "That's pretty consistent with what typically happens," said David Vite, head of the Illinois Retail Merchants Association. "The last time liquor taxes went up, distributors took the opportunity to increase their prices while all the time wailing about the government."
Even factoring in a discount for volume purchases, one area retail chain was paying $20.17 a bottle for fifths of 80-proof Smirnoff vodka, up from $16.11 in August. By itself, the tax hike would have added only 80 cents to the price.

Here's the thing, folks. We hear this same bullshit every time a booze tax increase is proposed: "It's only 80 cents a bottle! You can afford that!" Then when the tax gets passed, everyone is shocked -- shocked! -- to find that the price increase on the shelf is more than 80 cents.

Could we grow up? Here's how it works, and it's no mystery. When a producer/importer sells a new product to a wholesaler -- at, say, $10 a bottle -- the wholesaler will take that product, increase the price (called the "mark-up") by a certain percentage (which, in some states, is set by law; in some states, Pennsylvania for instance, the state is the wholesaler for spirits and wine, and marks up everything 30%) and charge that to the retailer: $13 a bottle. That's how the wholesaler makes money, and covers their costs (warehousing, trucks and delivery, records-keeping, marketing, advertising, taxes, etc.). Now, the retailer will mark up the bottle again, say 20% (note that a bar will achieve something like 100-150% mark-up; they have higher expenses, and, well, they've found that we'll pay it), so now it's on the shelf for about $15.60.

This is how retail works. This is how it's done, how it's been done for centuries: "Buy cheap, sell dear" is the rock-sold basis of business. And when the price increases at the top of the process -- the producer/importer level -- it increases at every step, just as it did when the original price was set. That's how it works.

Governments almost always add booze taxes at the producer/importer level. It's easier to attach them and collect them there...but it's inherently deceitful. Because you're adding a cost at the top of the process, knowing that it's going to increase as it comes down. Add 80 cents to a $10 bottle, and it's not going to be a $16.40 bottle on the shelf; it's going to be a $16.85 bottle on the shelf. 'But it was only an 80 cent tax increase!" the naifs in the press cry. 'Why is the price up $1.25?!' And the blame magically comes off the government.

Guys... it always happens. Producers will sometimes choose to 'eat' the tax increase -- Corona brewer Grupo Modelo famously swallowed the federal tax increase in 1991, and their sales boomed as a result -- but wholesalers and retailers almost never do, and they never "pass through" the increases without adding their mark-up. Why should they? It's just another price increase, and if they don't make money on those price increases, they're not going to be keeping up with the inevitable increases in their costs...and they'll go out of business.

Do producers piggy-back price increases on tax increases? Of course they do. If there's anything people, customers, hate more than price increases, it's prices that seem to go up every other month. It works much better to chunk the price up more once a year, and if the government's forcing your price up, that's the time to put your price increase in, and try to blame them for all of it (why not, they're trying to shaft you). As for the legitimacy of price increases in a faltering economy, as for the morality of it...well, craft beer's up, single malts are up, vodka's still up, bourbon's up. If we're buying more of it, that takes a lot of the power out of the legitimacy argument.

Look, I don't like price increases any more than you do. Contrary to what some people might think, I really do buy most of what I drink. But when I'm paying $6 pound for American cheese for my kid's lunches, and $7 a pound for farm-raised salmon, I don't know that these price increases are that out of line. Supply and demand, after all: the demand for champagne has slumped, and producers are cutting production and prices, for example. The demand for craft beer and whiskey go up, prices are going to go up. Again, that's how it works.

It simply does not work that companies make money by ignoring increases in their costs, or by increasing prices just enough to cover those costs without making a little more themselves. If you want to argue about how much more those prices should go up, well...take it up with St. Thomas Aquinas.

Bottom line? Tax increases on booze cost you more than your legislators promise you they will, because they knowingly lie (or at best, they misrepresent). But even more so, taxes on booze are inherently unfair, as are all excise taxes, because they tax one part of the population based on what they buy. Not how much, not on what they do with it, but what they buy. As I always say: if your proposed government program is an overall good for all the people -- like roads, police, courts -- then let all the people pay for it. If it's only good for some people, let them pay for it. Don't make me pay for it just because I'm having a beer with dinner.

Massachusetts: coming and going

I talked about the recent increase in booze taxation in Massachusetts recently (in the context of how a Massachusetts legislator voted for the tax hike and then got caught buying less-taxed, cheaper booze in New Hampshire). But this caught my eye this morning... Massachusetts put this tax in place to raise revenues during the recession, right? I mean, aside from the whole moral issue of raising taxes during a recession, that was the idea.

So how come they now want to ban alcohol advertising on public transit...which is a moneymaker for the Massachusetts Bay Transportation Authority? The ban "could benefit about 25,000 children" who ride public transit. By what, not letting them look at booze ads unless they look out a window at all the beer billboards? Hypocrisy. Ludicrous. How about the definite benefit to those kids of subsidizing public transit by selling ads?

BOHICA: higher booze taxes in Illinois, North Carolina tomorrow

After booze tax increases in New York and Massachusetts, now it's time for moderate-drinking residents of Illinois and North Carolina to celebrate being taxed more than their fellow citizens just because they like having a cocktail before dinner or a beer with the game. Taxes go up tomorrow in both states. I can only assume that New Dry organizations in the states and in the national hives (Marin, PIRE, yeah, I'm talking about you) are dancing with glee as short-sighted state governments pile on the pain by raising taxes during a recession.

I mean...a lot of these states have balanced-budget amendments. But it appears that to almost every legislator and governor, those requirements mean nothing about keeping spending in check; no, they're about a need to raise taxes. Sin taxes. Regressive taxes. I know the cries: "It's only a nickel!" (It never is: either it's a producer tax that ripples and expands, or it's a direct tax that's more by the time it gets to someone drinking good stuff) "Drinking is a luxury!" (So's candy, but there's no special tax on that. (Actually, there is: Illinois taxed that, too; see comments, below) Okay, pets are a luxury, and there's no tax on them!) "Drinking costs billions!" (Really? Check your figures. The whole booze biz also puts billions back into the economy.) "Drinking is a sin!" (Who let him in? I thought we got rid of you back in 1933. Anyway, your mom's a sin, but we don't tax her.)

Here's a cry for you: booze taxes unfairly tax lower-income citizens. Is that the kind of thing you want to do during the worst recession in decades? Way to go, Mr. Progressive.

Meanwhile, Pennsylvania has apparently dodged the bullet again, if Governor Rendell's latest lame joke is any indicator.

"The media's low-paid and high consumers." - Gov. Rendell, joking in a Harrisburg news conference this week about the state budget and the politics that determined that an increase in beer taxes would not find support.

Brilliant idea from CAMRA (no, really!)

The Campaign for Real Ale has a fantastic idea: zero tax on beers that are 2.8% ABV or lower. I blogged about it over at The Session Beer Project; take a look.

Montreal may have to wait a bit

I planned on getting more Mondial stuff up...But I'm swamped with paying work that I couldn't get to in Montreal. So I'll squeeze it in where I can. Just wanted you to know. Meantime, write your Senator about stopping a proposed increase in federal beer taxes. I'm not anti-tax, just anti-regressive/unfair/excise tax. Get over to www.Congress.org and send your e-mail! (I did, and I might send another.)

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.

Mr. Pinty and friends

Mr. Pinty and friends (he's the sad one) protest the huge UK beer tax increases (with further yearly increases written into law already) that are at least partly responsible for so many British pub closings.

No, really, that's what this is. I just love it every time someone says "Mister Pinty" with a straight face. Could they please say "Mister Pinty the Walking Glass o' Beer" next time?

Good Day in the Inquirer

Philly Beer Week got a beautiful piece in the Inquirer today, along with a great picture of Scoats tapping a firkin of Iron Hill (West Chester) Ironbound Ale (yeah, unlike the guy who wrote the caption and said it was Bourbon Porter, I can read the tag in the picture). Craig LaBan did a pretty good job encompassing this juggernaut, including taking a swipe at the "other" so-called "beer weeks" that have sprung up.

But the Inky also had a front page story about cigarette taxes -- how New Jersey raised them and got less money -- it's the "paradox" that an increase in the tax on cigarettes often (make that "almost always") results in a decrease in revenue from the tax. Amazing, ain't it? These anti-smoking groups have been saying for years that if you raise taxes on cigs, people won't smoke as much; have those chickens come home to roost (and crapped all over New Jersey's budget crisis), ruining the happy, cautious dance of hypocritical 'sin tax' balanced against cynical greed?

Truth is, this is how it usually happens, and it happens for more reasons than people quitting. A quote from the story:

"When you're in a high-tax state, smokers, like anybody else, are price-sensitive, so they're going to go looking for cigarettes where they're cheaper," said Gregg Edwards, president of the Center for Policy Research of New Jersey. "There is a small number of folks who just wouldn't absorb the price increase and just decided to quit, but most of those folks just go to other places."

Which neatly sums up why excessively high taxes like these are, essentially, a government stimulus plan for smugglers. When anti-whatever groups publish their neat little "taxes up, sale of [insert targetted "Bad Thing" here] down, yay!" policy studies and reports, they never mention that the most likely outcome is that the people are just buying the "bad thing" somewhere else. People cross the border to buy their cigarettes, or organized crime outfits bring truckloads of them from low-tax states like South Carolina. Are the benefits worth the crime, or the normalization of crime?

Michael LaFaive of the Mackinac Center for Public Policy recently studied the impact of cigarette taxes in Michigan, California and New Jersey... LaFaive's study estimated that 40 percent of cigarettes smoked in New Jersey come from out-of-state or illegal lines of distribution. The figure was based on smoking rates, the number of adults in the state, and the number of legal sales per adult.

Bump the tax up enough, and you'll get hijacking and theft, too. We had a case near here a couple years ago where someone smashed a pickup truck through the glass front of a store at night, grabbed armloads of cigarette cartons, tossed them in the back of the truck, and drove off with thousands of dollars worth of cigarettes (and taxes). Great idea, those higher taxes.

Okay, pay-off time. You probably know -- and if you don't, you do now -- that I don't smoke. So cigarette tax increases are not a personal issue. But folks: replace "cigarette" with "beer" or "booze" and "smoke" with "drink," and you've got the same issue, same problem. Beer tax increases usually don't raise revenue. Revenue stays the same, or drops, and less beer is sold, which means less money is made by brewers, importers, wholesalers, and retailers, which means less revenue from that part of the chain, and jobs are usually lost, which means less tax revenue and more benefit payments. It's a brilliant cycle.

What's the solution? End excise taxes. Stop taxing targetted industries. If you don't think people should smoke, make it illegal (and good luck to you if it's just one state at a time). Don't try to balance the do-gooder "raise taxes so people stop smoking" with the darkly cynical "raise taxes and hope they don't stop smoking so much that we lose revenue." Do away with all these ridiculous taxes and fees and charges and nickel-dime bullshit. Tax income and property, things everyone has to pay (you can be progressive about it, I'm not touting a flat tax) and no one can avoid by smuggling their home into another state.

You'll have a more honest government, a government that isn't meddling in people's lives with tax policy voodoo. You won't be subsidizing crime: hijacking, theft, smuggling. And you won't look stupid when the inevitable happens.

Letter on Beer Taxes

I saw a letter to the editor in the Inquirer a few days ago about increasing beer taxes. Here's what he said, in part: "In the interest of increasing state revenues, Gov. Rendell should substantially increase taxes on alcoholic beverages, especially beer. Most politicians are afraid to tackle this issue, because of the "macho man" ripple it may cause..."

I hate beer taxes (and liquor taxes, and wine taxes, and all such excise taxes that tax narrow groups based on consumption), especially when they lean on the whole "sin tax" thing, which this guy did: "...the state also would be helping to save lives." Really? The numbers are -- surprise! -- pretty damned vague on that, though they are pretty clear that to "save lives," beer taxes would have to go up by a lot more than the PA legislature is likely to raise them.

So I wrote a response, and they printed it today. Here's the conclusion, the real heart of the argument: "Push the state income or sales tax up half a percentage point, or cut spending, but don't balance your problematic budget on my beer-drinking back. It's not about being macho. It's about fairness, and not asking beer drinkers to pay your share."

Always nice to be heard.

Kentucky Beats up Bourbon Again

The state of Kentucky is a wonderful place. I lived there for a year in the 1980s, and I loved it, even through the heat. The people are friendly and gracious, the men generous and the women handsome, the fishing is good, the scenery is breathtaking above and below ground. The whiskey and the people who make it made my life a happier time.

But the Kentucky legislature sure can be log-headed. They have raised the tax on booze again, and Kentucky already had the third highest booze taxes in the nation. I could go on, but Eric Gregory, the President of the Kentucky Distillers Association, says it all pretty well here. Some excerpts:

Our state leaders should evaluate the entire revenue base and propose solutions that will stabilize our economy for years to come, not derail an industry that's on a roll. Raising alcohol taxes is a short-term fix with long-term consequences -- lost jobs, higher prices for consumers and yet another competitive disadvantage for one of Kentucky's signature industries.

Is there any other industry with a product that's taxed at least five times before it reaches the consumer? Has the legislature considered the long-term damage to small businesses and our hospitality industry in this grab for new revenue? And finally, is this any way to treat a thriving signature industry that's been so good to Kentucky? The answer is an absolute "no."

In Kentucky, the bourbon industry provides more than 3,200 jobs, pays more than $115 million in state and local taxes, and has planned capital investment of more than $100 million that will benefit the commonwealth for decades.

The bourbon industry understands that the state and country are facing a fiscal crisis. Many other industries are asking for bailouts and government help. But bourbon is not. We're just asking legislators to do no harm during these difficult times.

Be reasonable: leave bourbon alone. Hasn't it done enough?

The PLCB blog lives!

It's true: I finally posted another Reason Why the PLCB Should Be Abolished. Reason #13 points out that we don't really need the Pennsylvania Liquor Control Board for the state to make a dizzying amount of money off booze. If we privatized, it's quite likely that we'd actually make more.

All that, and a new poll, too. What more can you ask for?

Don't ask!

The Session #22 -- Prohibition and Repeal

It's The Session, beer blogging on a common topic, and this month it falls, with serendipitous beauty, on the 75th anniversary of the passage of the 21st Amendment: Repeal. If only this were Session #21! We've been asked to reflect on "What does the repeal of Prohibition mean to you? How will you celebrate your right to drink beer?" See all the links soon here at the 21st Amendment brewpub's blog.

21 Thoughts About Prohibition and Repeal.

1. Prohibition was about as likely to ultimately succeed as a law repealing gravity. People drink, and we've been enjoying alcohol for about seven thousand years or more. Note that longevity does not equal an invulnerable cultural position, but the stuff tastes good, too, and it makes you feel wonderful.

2. This did not stop people from attempting to make Prohibition work. Donkeys.

3. But note also: we had it coming to us. Prohibition happened because booze and the people who sold it were out of hand. Saloons were often dens of iniquity, drunken men did squander their paychecks and beat their wives and children, brewers and distillers were corrupt and fed graft money into a corrupt political system. We look back on saloon society and plentiful local breweries and a wide diversity of distillers (oh...for the days of rye distillers in Maryland and Pennsylvania), and we see things through amber-colored glasses, a beautiful Golden Age of Drinking. Well...there were some pretty cool things. But there were some pretty ugly things, too: see Gangs of New York.

4. There was something to that Golden Age, though. The heart sags to think of the local breweries and distilling traditions lost because the industry couldn't police itself. We had monastic breweries here in America, we had pot-stilled whiskey, we had flourishing wineries, and we had saloons that were opulent palaces of booze. All crushed, forcing us to start over from practically nil. Woe.

5. Enforcing Prohibition was a disaster. For every Eliot Ness, for every Mo Smith and Izzy Einstein (pictured here, sharing a legal drink after Repeal), there were a hundred corrupt enforcement agents who signed up for a chance to make bribe money, get away with shooting rivals, or to get inside information on raids for their gangster bosses. Enforcement was underfunded -- often on purpose -- and at times vicious: there was support among some Drys for not labeling wood alcohol as poison, or for simply poisoning all alcohol. And it never stopped more than a minuscule amount of the huge illegal trade in alcohol.

6. If all that sounds like The War On Drugs, the DEA, and Paraquat...well, draw your own conclusions.

7. But while you're drawing those conclusions, keep in mind the obvious. What the War On Drugs is today, Prohibition was yesterday; a doomed attempt to control an easily produced substance that a significant part of the population wanted to buy and consume, an attempt that built and hugely enriched a criminal organization, while making many otherwise law-abiding citizens criminals and scofflaws. Great...

8. Oh, and it also lost the government a huge source of taxes (not that I approve of those excise taxes, but I've found my opposition to them to be quixotic at best) and turned the quality of that product to crap. Thanks.

9. Prohibition was actually immensely popular...at first. It must have been, the 18th Amendment was ratified very quickly. Almost as quickly as the 21st Amendment was, 13 years later.

10. Prohibition was not, however, foisted upon us by Bible-thumpers, "conservatives," puritans, rural nutjobs, or Republicans. They had their place in it, but the progressives, liberals, city-dwellers, public healthmongers, and Democrats were right there beside them. Not a judgment either way, just truth. The Anti-Saloon League was the NRA of its day, the first real power politics practitioner in the modern era, and they didn't care what party you belonged to, as long as you promised to vote Dry.

11. Prohibition was foisted on us by a progressive lie, much like keg registration is being shoved down our throats now. It started in one town/township/county. But the drinking wouldn't stop, and booze would come in from every border. "Give us statewide prohibition," would be the cry, "and we'll show you how it can work! The outsiders are ruining our good work!" And they'd get statewide Prohibition, and the drinking wouldn't stop, and booze would come in from every border. "Give us national prohibition," was the cry, "and we'll show you how it can work! The outsiders are ruining our good work!" And they got national Prohibition...and we got Al Capone, Dutch Schultz, and Joe Kennedy. "Give us more money for enforcement, give us the military to stop smugglers, give us easier search warrants!" And they got it...and nothing happened. Prohibition, as Will Rogers said, made you want to cry in your beer, and then denied you the beer to cry in. Finally, people got fed up, and started talking Repeal.

12. Prohibition got a big boost from business -- John Rockefeller, Henry Ford, and other industrialists thought it would mean a clean and sober workforce that they could get to work more like the automatons they wanted -- and government -- because the feds now had the income tax and were rolling in revenue, and thought they didn't need booze tax any more. So did Repeal. When Rockefeller saw that his workers were still drunk, and now were sick from bootleg crap booze, and saw the taxes going to pay for an increasingly corrupt enforcement bureaucracy, he did an about-face. When the Depression hit in 1929, income tax revenues dropped, and the feds needed money to pay for jobs programs -- hey, start up the booze biz again, it's a two-fer!

13. Women were a major force for Prohibition -- they were feeling empowered by the suffragist movement and the Progressive movement -- and, again, for Repeal. Upper-class women were revolted by the corruption, by the blatant hypocrisy of Dry politicians who drank like fish, and by the lack of human sympathy displayed by the more cruel Drys (those guys who wanted to poison the drunks). Urban Catholics and immigrants were against Prohibition because it simply seemed unnatural to them; well, it was.

14. Repeal became unstoppable as the Depression deepened because of the two-fer effect mentioned above. But the damage to America's palate had already taken place. We got used to lighter (cheaper) beer, white (unaged) spirits, Canadian and Scotch (smuggled) whisky, and sweet fortified (cheaper) wine. It took us decades to re-discover what we'd lost.

15. Some of it never was recovered. Thousands -- thousands -- of breweries closed, never to re-open, and the idea of the local brewery was irreparably crippled. Hundreds of distilleries closed, and bourbon and rye distillers were left with a huge, irreplaceable hole in their warehouse inventories. Young bourbons tasted vile, and sold for such low prices that the bourbon business referred to sales as "swapping dollars": the cashflow from the income just barely balanced the outflow of production costs. Rye whiskey, America's heart-warming frontier spirit and the pride of the Monongahela, practically disappeared. We had a hole shot through our memories and our national palate that would take years to begin to replace.

16. Repeal was a gloriously happy occasion. The beer trucks rolled, wine flowed, hipflasks were openly waved. Happy days were here again! I would truly love to go back in time for those two days -- Happy New Beer in April of 1933 and Repeal Day eight months later -- to watch America celebrate the return of John Barleycorn and Demon Rum. And to eat the livers of the Drys...how did Conan put it? "Crush your enemies. See them driven before you. And to hear the lamentations of their women." Oh, yeah. That would have been sweet, watching the Anti-Saloon League hating all those fun-loving boozers.

17. The Drys often got the last laugh, or at least a long one. States remained dry, then counties, towns, as local option laws held on. Screwed-up liquor laws kept things weird: in some states, the word "saloon" was illegal. Morality and government greed got mixed in an unholy combination of taxes and control schemes: state stores, rapacious prices, and customers treated like unclean supplicants. An alliance of Baptists (who wanted no drinking) and bootleggers (who wanted no legal booze sales) kept many counties in Kentucky dry to this day. The Drys were salted through the state legislatures, and everyone seemed to think that the return of Prohibition was lurking right around the corner -- after all, it had happened once -- and they had to step cautiously lest it return.

18. But the Drys had been beaten. Prohibition continued to recede, the WCTU became a joke, the ASL withered and died (corrupt itself, at the end), and "temperance" was forgotten. The New Drys, the neo-prohibitionists, didn't really start to re-group until the 1960s, when they found a new home among the Science Geniuses and the Safety Nazis, the good people who were going to save us from ourselves with Science. They realized that Prohibition had been tried, and failed. They openly announced that they would bring their new order to the nation by limiting access to booze (liquor license procedures), by tightening who could drink (the 21 LDA), by re-defining "drunk" (the 0.08 BAC DUI limit), and by raising excise taxes. And that's what they've been hammering away on ever since, with some success.

19. How do we fight it? Two things. First, to quote Mad-Eye Moody (the fake one) in the Harry Potter books: CONSTANT VIGILANCE! The New Drys are constantly flooding the media with anti-alcohol bullshit. Whenever they do, someone should counter them. The brewers, distillers, and vintners didn't in 1919, and look what it got them. Don't ignore them; they are at work every day, earning their grant money and taking aim at your fun. Now, the second thing...we have to admit that they're not all wrong. I've heard ridiculous bullshit from our side too: "You can't get drunk on beer." "You're not an alcoholic if you drink the good stuff." And worst of all, this:

..

..

That's right, silence, as in not admitting the problems of alcohol exist. We have to be honest, or we can't hold them to the same standard. Remember: the reason we got Prohibition was because there really was a problem. A big one. We have to step up and be honest about fighting it.

20. In the meantime, the full fruits of Repeal are sweeping the nation at an increasing rate. Long-dry towns in the South (and North) are going wet, ridiculous laws are being repealed (limits on beer strength; draft beer is allowed in Montgomery, Alabama; South Carolina finally gets rid of airline bottles at bars; and the PA case law...how long, O Lord, how long?!), and attitudes are changing (lowering the 21 LDA is being openly discussed for the first time in 20 years). The New Drys are fighting fiercely, and ground is exchanged back and forth, but we're definitely in the fight.

21. As for me...I intend to celebrate this momentous 75th Anniversary of Repeal in the same way everyone else did in 1933. I'm going to get me to a brewery, and get a few big seidels of good lager beer.

Brooks takes on the Marin Institute

Jay Brooks has written a great diatribe -- not over the top enough for a rant, but it'll do -- about the booze-hatin' Marin Institute's support for California governor Arnold Schwarzenegger's proposed nickel-drink tax. He exposes all the crap about this proposal: the basic unfairness of it, the bogus justifications for it, the nebulous "statistics" used to support it, the imposition of morality it represents, all that, and does it well. Anti-alcohol groups like the Marin Institute, like the Center for Science in the Public Interest, like the Center on Alcohol and Substance Abuse, like the Center for Alcohol Marketing and Youth -- no wait, they folded their tents and slipped away into the night (or another Robert Wood Johnson Foundation-funded anti-booze group, same difference) -- consistently misrepresent the facts, rig the statistics, and spin the studies. This one is a classic.

But I have to disagree with Jay on one thing, this:

"I can’t help but be surprised to see neo-prohibitionists — an overwhelmingly conservative bunch — co-opt liberal socialist (and President-elect) Barack Obama’s tagline and appropriate it for their own use."

Neo-prohibitionists are not overwhelmingly conservative! That's what makes them dangerous. They are, as they were 90 years ago, before the neo- part came along, a movement that spans the political spectrum and uses whatever tools are to hand. They are against alcohol for moral reasons, for "health" reasons, and often, sadly, because their family was blighted by an alcoholic. We cannot assume that they only come from one side of the aisle...if we do, we'll be blindsided.