How much do you really pay for that beer?

Some quick facts based on a survey done in 2003 by the Beer Institute.  In 2003, taxes represented 40.8% of the retail price of beer. So if you spend $5.00 for a pint of beer, $2.04 went to taxes paid by brewer, distributor, retailer and yourself.   If you spend $8.00 for a six pack $3.24 went to taxes.

            But that’s really not the entire picture.   Let’s add in your income, state, Medicare and social security tax on every dollar you earn.   Let’s make some assumptions and say you are in the 25% federal income tax bracket.  You also pay about 7% in social security, about 1.5% in Medicare and let’s play with an assumption of 4% in state income taxes.  That all comes to 37.5% of your paycheck going to income related taxes.   So for every dollar you spend you actually need to earn $1.6 to have that $1. 

            This all adds up to having to earn $8.06 to spend $5.00 on that pint.   That raises the tax burden on beer to $5.04 for a $5.00 pint!  If this doesn’t compute, think of it this way: By the time you have spent $5.00 for a pint of beer various government taxes amounting to $5.06 have been paid.

            Buying that six-pack for $8?  You’ve earned $12.80 to have that $8.  $8.04 has gone to pay taxes on that $8 six-pack.

            Get the picture?  It’s one of the hidden costs of beer that most beer drinkers don’t realize.   I suppose that the same could be said about the hidden cost of buying anything, but the fact is that beer related taxes are more than general commodity taxes.  How much more?  

“In comparison, total Federal, state, and local taxes equal 24.2% of all other purchases in the U.S.”  In other words according to the Beer Institute’s survey beer is taxed a whopping 68.6% more than other purchases in the U.S.  

            It’s not a pretty picture and several state governments continue in their attempt to raise taxes on beer, as if it weren’t enough. 

            It seems enough to me.