Proposed state beer tax increases hard to swallow - impacting jobs and beer drinkers

February 17, 3:14 PMBeer ExaminerCharlie Papazian

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The unpleasantly surprising ghost cost of the beer
you buy. 

Do state legislators realize the impact that increased beer taxes will have on jobs and 80 million responsible beer drinkers?

     Oregon legislators propose a 1,900% increase in state beer excise tax.  Idaho propose a convoluted tripling of beer tax.  Will there be other proposals to raise taxes on beer in your state?  Unfortunately, I fear yes.

     Do legislators understand the economics of food and beverage distribution?  I don’t think so.   Let’s take this example:  If the tax on a case of beer is increased by $1 the headlines emphasize “$1 a case increase.”  But that is a misrepresented conclusion.

     The system of distribution and retail pricing significantly increase the cost to the beer drinker.   If $1 a case is paid at the brewery, the distributor will typically add 30% (30 cents) and the retail store will typically add another 30% on top of that.   So that’s really $1.69 a case increase to the beer buyer.  That’s still not the entire story.

CNN Reports on Oregon beer tax proposal above video link

     To add insult to injury brewers large or small pay other taxes: State use taxes on equipment, inventory taxes, federal excise taxes, payroll taxes, corporate taxes, sales tax, and more. Taxes already represent 40% of the price of beer, according to a Beer Institute survey.  Are you finding all this hard to swallow?  

     Here’s more.  Let’s add in your income, state, Medicare and social security tax on every dollar you earn.   Let’s assume you are in the 25% federal income tax bracket and you pay about 7% in social security, about 1.5% in Medicare and let’s assume 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.

      It all adds up for the beer drinker.  In order to pay for that alleged “$1 a case” tax you need to actually earn $2.70 !

      It’s not a pretty picture for beer drinkers.  It’s even worse for brewers who with increase cost of beer see a drop in beer sales (often with an increase in sales of cheap alcohol).    A drop in beer sales means a drop in purchase of agricultural products such as malt and hops; loss of jobs.  Fewer bottles and cans, packaging materials, equipment purchases; loss of jobs.  Less beer distributed, fewer deliveries, loss of jobs.  Less beer sold at retail; loss of jobs.  Less of everything: less payroll taxes, sales tax, use tax, inventory taxes, corporate profit taxes.  More unemployment.

     If state governments want to fund special projects (such as drug and alcohol abuse programs) it seems they could reapportion all the taxes already collected on beer.   According to a Beer Institute’s survey, beer is taxed a whopping 68.6% more than other purchases in the U.S.  

     Why beer?  Why put a disproportional burden on 80 million responsible beer drinkers?   It seems that beer drinkers and brewers are already paying more than their fair share and that the “needed funding” is not being appropriately proportioned from already taxed beer dollars.
 

The message is clear: The alleged "upside" is an upsidedownside.

February 20, 4:30 Mountain Time:  More news just in:  Arizona legislators trying to outdo Oregon with a 2087% increase in beer tax

     Join the beer activist network called Support Your Local Brewery and on call to help on local, state and national issues threatening your responsible enjoyment of beer.