Alcohol Taxes


CNN ran a story today about a study showing correlation between higher taxes on alcohol and less alcohol-related deaths:

Each time the state of Alaska raised its alcoholic beverage tax, fewer deaths were caused by or related to alcohol, according to the study that examined 28 years of data.  .  . [an increased tax margin on alcohol would tap into] an available source of revenue that has not been looked to for a very long time,” Hacker said. “The tax increases are long overdue. The product doesn’t pay its way in covering economic and social costs associated with its use.”

If alcohol is consumed in a responsible manner, the product has minimal negative social costs, and there are even studies that suggest health benefits from alcohol consumption. Millions of Americans, as a matter of fact, are somehow able to buy and consume alcohol and manage their affairs, so one has to question the overall fairness of choosing one product class and dramatically raising the tax rate on it, if a primary intent is to change social mores and behavior.

Other studies indicate that so-called sin taxes are truly regressive, hurting the poor more than the middle or upper classes, and facilitate the development of black market economies and organized crime as well.

It would also be interesting to see the effects on overall sales tax revenue for a state after it raises its alcohol taxes dramatically; does total state sales tax revenue increase when the tax on alcohol is raised? Drinks at chain restaurants often make up a significant portion of the tab. Everyone likes to kick back a pair of giant-sized margaritas at On the Border, but if the taxes go up, are people going to just cut back on dining out and mix their own at home? And do the overwhelming majority of people who use alcohol responsibly cut back on consumption completely thus lowering sales tax revenues as well? Does decreased demand for alcohol have cascading effects, decreasing gross taxable income for restaurants, liquor stores, and distributors, therefore dampening any benefit from the state gets from the increased alcohol tax rate?

Good questions to answer before deciding to raise taxes on people, right? Readers (and there are about 200-250 people checking into this blog daily now, thank you very much!), please place comments to this post that link to anything that has empirical data answering the above questions.

And here is the other assignment: In the comments section, link to any media story that shows either a) the benefits of paying higher taxes or b) the eagerness of Americans to pay higher taxes in order to gain a positive social benefit. Let’s see if a narrative is being created, consciously or otherwise, to make the prospect of increased taxes more palatable to Americans.

Post Script: If you absolutely do not want to pay a single penny more of your hard-earned money to the government, especially for the “sin” of having a well-stocked liquor cabinet, learn how to brew your own beer and wine. Check in here from time to time too, and learn from my mistakes!



4 thoughts on “Alcohol Taxes

  1. I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

  2. Do you mind if i use some of your work in my web site to help stop alcohol problums and help people to get on there feet after drinking or drug problums?.

    P.S keep up the good work.

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