Thursday, March 20, 2014

40 Percent of What You Pay for Beer Goes to Taxes!

Yes, 40%. And that's just an average. In high tax Blue states ( and especially in Democrat run big cities like New York, Chicago and Los Angeles) it's even higher:

The next time you pour yourself a cold one, give yourself a pat on the back in the name of patriotism. On average, 40 percent of the price you paid for that beer is going straight to Uncle Sam and the state.

Lobbyists in Washington are pushing to reduce those taxes, at least by a few cents. The Beer Institute is supporting legislation cleverly titled the BEER Act, which would reduce the federal excise tax from $18 per 31-gallon barrel (an amount that doesn't actually exist; a keg is 15.5 gallons) to $9 for large brewers. Smaller operations would pay nothing in excise taxes on the first 15,000 barrels they produce, while kicking in a mere $3.50 through 60,000 barrels.

Passing the bill would not only (slightly) reduce the cost of beer, but could also lead to an uptick in the number of breweries in the United States. The industry, which the Institute has tracked since 1887, has been growing rapidly in the last two decades, thanks in part to tax breaks for small brewers.

The original excise tax on beer was levied by the Feds as a small, temporary tax to help pay for the cost of the Civil War. Needless to say, it wasn't removed after the war and has been a reliable 'sin tax' for politicians to plunder ever since.

Lobbyists for the brewers who want the tax lowered are arguing that it would allow them to grow their operations and create jobs, which would actually provide more tax revenues.

While the BEER Act seems pretty much destined to die in committee, it's largely a push back by the industry to prevent even more tax hikes,which have already been proposed at the federal and state levels as well as various municipal levels.

The result, as with most regressive taxes is that people simply buy less. In California, for example, politicians in state and municipal governments raised taxes on tobacco products and then spent the money they anticipated making from those awful smokers feeding their habit. They then passed laws severely limiting where the people they anticipated plundering could smoke.

Caught between massive price hikes and limited areas to smoke, guess what? Tobacco sales plummeted as people either quit, moved to roll your own or to electronic cigarettes and the anticipated tax revenues never materialized.

While that may have been a good thing health-wise (full disclosure, I'm a non-smoker) it turned out to be lousy fiscal policy. And higher taxes on beer would be even a worse idea, since it's comparatively easy to make at home.

In fact, now that you know this, I suggest that every American who enjoys a cold beer on occasion avoid being ripped off by unreasonable taxation that I'm sure you never voted for. Save a ton of money and extend a raised digit to the greedy politicians by making your own at home. It's what our forefathers who founded our beloved Republic did faced with the same situation.


louielouie said...

for whiskey, it's closer to 50%.
and that comment about blue states isn't 100% accurate.
in certain states it's called a sin tax. in oklahoma, the state excise tax is twice that of any state bordering us.
it also depends on the structure of distribution within a state as well.
in oklahoma, we have what is referred to as the three tier system.
the third tier is a good ol' boys network that keeps the legislators informed as to .......... well i don't rightly know what the hell they keep up with.
shouldn't monkey boy be contributing to an essay like this. if he's sober. and he never is.

Rob said...

Actually, Weekend Monkey will probably be reappearing here fairly soon. His days of working for Elizabeth Warren are apparently numbered as she has serious Potomac fever and several other top aides have reportedly launched a successful campaign to convince her that he's a liability, being a monkey and all.

The poor little guy has taken a big pay cut and has already been bounced from his plush office with his own secretary. He's now is relegated to a small area in the back office without even a phone, where they have him doing basic filing and putting address labels on envelopes, the last I heard.