News Senators propose lowering alcohol tax

Discussion in 'Beer News & Releases' started by Lazhal, Nov 17, 2017.

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  1. Lazhal

    Lazhal Disciple (370) Mar 13, 2011 Michigan
    Beer Trader

    http://money.cnn.com/2017/11/16/news/beer-wine-whiskey-tax/index.html?iid=hp-grid-dom

    Excerpt:
    3 Cheers to this!
     
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  2. AZBeerDude72

    AZBeerDude72 Meyvn (1,387) Jun 10, 2016 Arizona
    Premium Member Beer Trader

    Holy Cow, a tax break for beer, amazing. All for this, hope it works out and passes. Cheers....
     
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  3. readyski

    readyski Aspirant (251) Jun 4, 2005 California
    Beer Trader

    Not if I have to accept the rest of the pork in that bill :rage:
     
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  4. Bitterbill

    Bitterbill Poo-Bah (5,880) Sep 14, 2002 Wyoming
    Premium Member Beer Trader

    Current beer tax in Wyoming:

    Beer $18.00 per 31-gallon barrel, or $0.05 per 12-oz can
     
  5. Minnebrew

    Minnebrew Initiate (116) Jun 9, 2015 Minnesota

    Sorry to be a Debbie Downer, but with the USA saddled with a huge debt and large annual deficit, I am not in favor of lowering taxes, especially for non-essentials. It's irresponsible, pure and simple.
     
  6. Jaycase

    Jaycase Meyvn (1,175) Jan 13, 2007 Illinois
    Beer Trader

    Beer is a luxury good and should be taxed as such imo. These particular taxes are just passed on to the consumer and as the article mentions this tax savings will not be passed on to consumers for anyone thinking it might. And with breweries popping up all over the place I don't see the current tax rates being an imposing barrier to entry either for new breweries. I'm curious what will be directly impacted (services, programs) by this lost tax revenue. Not sure if it is known but the article does not mention that.
     
    #6 Jaycase, Nov 17, 2017
    Last edited: Nov 17, 2017
  7. Bitterbill

    Bitterbill Poo-Bah (5,880) Sep 14, 2002 Wyoming
    Premium Member Beer Trader

    For how much breweries put back into their respective communities, I, for one, welcome the tax reduction, if it passes.
     
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  8. Minnebrew

    Minnebrew Initiate (116) Jun 9, 2015 Minnesota

    You could say that about many different industries. If we don't tax any of them, we have no revenue for the military, social security, roads, etc.
     
  9. jesskidden

    jesskidden Meyvn (1,304) Aug 10, 2005 New Jersey

    The Federation of Tax Administrator's pdf of State Beer Excise Tax Rates says Wyoming's ET on beer is 2¢/gallon, so $0.62/barrel - the lowest in the country.
     
  10. bbtkd

    bbtkd Poo-Bah (2,056) Sep 20, 2015 South Dakota
    Premium Member

    Almost pointless now, but probably from an era where that generated serious revenue and/or helped limit sales.
     
  11. Sweatshirt

    Sweatshirt Aspirant (298) Jan 27, 2014 New Hampshire
    Beer Trader

    Luxury good should be taxed harshly imo, it's useless from a big picture standpoint. This tax cut will not be passed on the the end consumer anyhow so it's useless from where I stand as well.
     
  12. Bitterbill

    Bitterbill Poo-Bah (5,880) Sep 14, 2002 Wyoming
    Premium Member Beer Trader

    You know, I knew that. I don't know why I quoted that false info that I got on the web.
     
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  13. Lazhal

    Lazhal Disciple (370) Mar 13, 2011 Michigan
    Beer Trader

    That statement seems to be contradictory. How could taxes that are normally passed to the consumer, when lowered, not result in a net gain for the consumer.

    Perhaps the brewery would take the opportunity to profit from the net gain. In either case, that would be a brewery level decision, not enforceable through the bill.
     
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  14. AZBeerDude72

    AZBeerDude72 Meyvn (1,387) Jun 10, 2016 Arizona
    Premium Member Beer Trader

    I saw on the local news today that small breweries go from around 7 bucks to $3.50, so they save 50%, I have to think this helps them overall. The less they pay the better they do, the more people they can hire, etc. If you look at the taxes we pay on goods, income taxes, gas taxes etc. I think we the people deserve to lower as many as possible so I am all for less for anyone and everyone.
     
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  15. EnronCFO

    EnronCFO Zealot (527) Mar 29, 2007 Massachusetts
    Beer Trader

    Add in the tax cuts for small businesses overall and I'd say its time to start a brewery. :wink:
     
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  16. jesskidden

    jesskidden Meyvn (1,304) Aug 10, 2005 New Jersey

    Well, it wasn't "false" since that is the Federal Rate that the Big brewers pay in every state...

    The current Federal Excise Tax "Reduced Rate" for the first 60k barrels of $7/bbl equal less than 2¢ a 12 oz. bottle. Even in the unlikely scenario of the small brewers deciding to cut their prices by 24¢ a case, not sure how much benefit or even noticable that would be for most consumers - especially since it is not unusual for the retail price of a beer to vary more than 1¢ bottle from store to store in many states.

    In 1933, at Repeal, brewers paid $5/bbl ( or over $95 in 2017 dollars according to the BLS) and were happy to do it and be back in business. That $5 was equal to their total costs and to their total profit. Something tells me that that is not the case with the current Reduced Rate of $7/bbl (or even the full $18).
    [​IMG]
    That what the OP's CNN article also said.
     
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  17. Ranbot

    Ranbot Zealot (517) Nov 27, 2006 Pennsylvania

    I don't think breweries are going change their prices or retail stores will bother changing all their SKUs for a mere $0.05 per 12-oz beer, so I doubt the tax break will result in lower beer prices for consumers. Even if the price was lowered that's not significant enough for most customers to even the notice the difference.

    If one has an ideological stance against taxes, then I can't argue with ideology. I agree with several others above that 1) beer is a non-essential luxury good that is fine to tax slightly higher than non-luxury items; and 2) the current federal tax rates on beer clearly are not hurting breweries.
    [​IMG]
     
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  18. Squire

    Squire Poo-Bah (1,711) Jul 16, 2015 Mississippi
    Beer Trader

    I'm one of those ideologues who believe there should be no taxes on food and beer is foodstuff.
     
  19. AZBeerDude72

    AZBeerDude72 Meyvn (1,387) Jun 10, 2016 Arizona
    Premium Member Beer Trader

    I agree on the food item, taxing food or other essentials is wrong. I am not a fan of tax at all since we already get hit every pay check. No one in the political world ever talks about the hit we take purchasing every day goods.
     
  20. mamaraza

    mamaraza Disciple (357) Jul 6, 2014 Texas
    Beer Trader

    Cutting deductions on mortgage interest while reducing taxes on beer is a cynical move indeed.
     
  21. Beer_Economicus

    Beer_Economicus Devotee (415) Apr 8, 2017 Indiana
    Beer Trader

    Economics is fairly straight forward on many items.

    1. Taxes on luxury goods can be tricky. There are many substitutes - so you can't impose as large of a tax as you want (like on cigarettes) and expect people to still buy them. A small tax like this (or even a 1% increase in the sale's tax on alcohol) is likely to do essentially nothing.

    2. From the perspective of levying the largest amount of taxes that we can without hurting social welfare, tax on alcohol should probably be raised across the board (to consumers). This isn't my specialty, but my intuition is that you're much better off taxing consumers directly via sales tax on alcohol than taxing the producer. Not saying they shouldn't have taxes, I am just saying if the goal is to raise revenue, alcohol (in each sector - i.e. Beer vs wine vs liquor) is relatively inelastic (as price increases you are not that likely to decrease the amount you are purchasing), and so adding a tax to the consumer is not likely to decrease sales, and so tax revenue is likely to increase. A tax across all alcohol is more safe than on just beer, otherwise you might switch (with a large enough change) to a different type. Again, the type of tax here is so small it doesn't not seem important at all.

    3. You cut taxes on producers when you want to incentivize them to increase hires, increase investment, etc.. The economy is doing well. The beer sector is doing very well. I don't see what this tax break would accomplish at all. Additionally, it seems far to small to be incentivizing.

    4. Someone mentioned this being too small of a tax to pass to consumers (right now). You're correct that in the short-run there are aspects of production that are fixed, including all the SKUs etc that you mentioned. You're absolutely right that unless other changes come at the same time, this is not likely to be passed to consumers for some time.
     
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  22. pat61

    pat61 Poo-Bah (4,882) Dec 29, 2010 Minnesota
    Premium Member

    Taxing alcohol, since at least the Civil War has been an easy way for government to raise money. Tax breaks for smaller breweries make sense based on their economic impact on their local communities. There is enough distasteful crap in the existing tax bill - like removing the excise taxes on owning and maintaining private jets - that I am willing to suffer through paying a little more for beer and the stupid tax gives me something to companion about that most people agree with.
     
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  23. drtth

    drtth Poo-Bah (3,501) Nov 25, 2007 Pennsylvania

    You can push that idea of govt. support by alcohol tax back to the post Revolutionary War period when a tax in distilled spirits was introduced.

    https://en.wikipedia.org/wiki/Whiskey_Rebellion
     
  24. pat61

    pat61 Poo-Bah (4,882) Dec 29, 2010 Minnesota
    Premium Member

    Alcohol taxes also helped fund the Civil War - especially in the north and you could write a whole book on the way government taxes impact beer - such as in England - and the impact on the strength of the beer and other qualities. The required research is incredibly dull but the results can be interesting.
     
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  25. drtth

    drtth Poo-Bah (3,501) Nov 25, 2007 Pennsylvania

    Agree completely.

    In effect the fed govt. used alcohol tax (one of the first taxes passed by the new congress) as a major source of funds untill the introduction of the personal income tax.
     
  26. readyski

    readyski Aspirant (251) Jun 4, 2005 California
    Beer Trader

    May as well throw scotch, bourbon and cannabis into that group also.
     
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  27. rgordon

    rgordon Champion (810) Apr 26, 2012 North Carolina

    Taxing food is really regressive, but everyone eats. Like revenue on a plate. Taxing alcohol makes more sense, it's "less" essential....I just generally wish that there was more certainty/accountability in knowing how well revenue is managed at any level of government. It works nicely locally, mostly.
     
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  28. taylordane

    taylordane Initiate (120) Dec 28, 2015 California
    Beer Trader

  29. Lazhal

    Lazhal Disciple (370) Mar 13, 2011 Michigan
    Beer Trader

    Vox is really stretching on that one. If tax rates went up on alcohol making even cheap booze expensive, it could simply shift deaths from alcohol to other abused drugs when addicts switch to a cheaper alternative.
     
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  30. lordofthemark

    lordofthemark Disciple (306) Jan 28, 2015 Virginia


    any data that actually supports thus?
     
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  31. juliolugo

    juliolugo Initiate (66) Jun 22, 2015 Massachusetts

    Regressive taxation, like sales tax and tax on luxury goods, is always a bad thing because it requires lower income individuals to effectively pay a higher tax rate than upper income individuals. Any elimination of regressive taxation is good, especially when offset by increases to marginal income tax rates and increases in property taxes.

    However, this doesn't appear to be a tax paid by individuals and is instead paid by the producer? If so, I wouldn't expect this change to have any effect on the price of beer for the individual since any company would rather pocket this savings as profit, only lowering prices as needed to compete with other producers.
     
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  32. Beer_Economicus

    Beer_Economicus Devotee (415) Apr 8, 2017 Indiana
    Beer Trader

    What?

    I think one of us might be confused (not sure if it is me or you). I've seen a couple different definitions for regressive taxes - one comes from the idea of regressive transfers (redistribution from the poor to the wealthy, i.e. creating more inequality - vs. progressive transfers which are transfers from the wealthy to the poor, i.e. creating more equality). The other (i am admittedly less familiar with), is the one that you are referencing.

    I'm not quite sure that I follow. Tax is not my field, and I am fairly unfamiliar. It's not clear to me why taxing luxory goods is a bad thing (this is a good thing if you are in favor of progressive transfers as I understand it). It's also not clear to me why a sale's tax effectively makes lower income individuals pay a higher tax rate. Any clarification would be appreciated.
     
  33. CB_Michigan

    CB_Michigan Aspirant (211) Sep 4, 2014 Illinois
    Beer Trader

    I'm confused by the luxury goods statement as well. Maybe @juliolugo meant sin taxes, which can be construed as regressive. For the sales tax, it's a matter of what percentage of a person's income is required to pay the tax:

    Say person A makes $600/week and spends $100 on goods at 6% sales tax. Their effective tax rate is 1% ($6/$600).
    Person B makes $1800/week and spends that same $100. Their effective tax rate is 0.33% ($6/$1800).
     
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  34. juliolugo

    juliolugo Initiate (66) Jun 22, 2015 Massachusetts

    I'm less familiar with luxury goods taxes, but even if they are taxes on only certain luxury items, the taxation is still regressive as the tax as a percentage of income becomes smaller as income increases. For me, limiting the luxury goods tax to items that are unlikely to be purchased by lower income individuals isn't sufficient (I'd rather do away with the tax and concentrate on taxing income). Sin taxes are certainly regressive (and can be seen to imply, as income increases, the less we care about "sinful" behavior). Progressive taxation ensures that tax as a percentage of income increases as income increases, which some (like myself) consider to be fair.
     
  35. Haybeerman

    Haybeerman Poo-Bah (2,334) May 21, 2008 Colorado
    Premium Member Beer Trader

    Well, the tax being reformed is the Federal Excise Tax (FET) on beer (not the state excise tax of Wyoming or any other strate); that is $18 per barrel. January 1, 1991 the FET on beer doubled from $9 to $18 (its a graduated scale - $18 is the highest rate). As a result, beer prices rose, on average, ~6%. If anyone is interested in other outcomes of the historic increases, The National Bureau of Economic Research has a lot of data on the topic (you may agree or disagree with some of their analytic methods).

    I wonder if the lowering of the FET will have the same impact?
     
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  36. Haybeerman

    Haybeerman Poo-Bah (2,334) May 21, 2008 Colorado
    Premium Member Beer Trader

  37. Ranbot

    Ranbot Zealot (517) Nov 27, 2006 Pennsylvania

    Alcohol taxes are a big part of why Prohibition was repealed too. The loss of alcohol taxes to fund government programs was noticed by politicians. Removing an unpopular law and adding more tax revenue without increasing personal income taxes was a compelling argument that won over many politicians who previously supported or were moderate on Prohibition [in addition to it being obvious the law wasn't working at all :rolling_eyes:].
     
  38. CASK1

    CASK1 Disciple (341) Jan 7, 2010 Florida

  39. Biff_Tannen

    Biff_Tannen Disciple (319) Dec 8, 2013 Missouri
    Beer Trader

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  40. Biff_Tannen

    Biff_Tannen Disciple (319) Dec 8, 2013 Missouri
    Beer Trader

    God forbid they have more money to expand, hire new employees, produce, more product, etc. All of which provides more tax revenue through payroll taxes, sales tax, etc. Not to mention, provides jobs. God forbid...
     
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