Should Hard Lemonade Be Hit As Hard As Hard Liquor?

Jacob Sullum | December 27, 2006

California's Board of Equalization wants to tax certain malt beverages at the same rate as liquor, which would add about $2 per six-pack to the price of malt-based "alcopops" such as Smirnoff Ice, Bacardi Silver, and Mike's Hard Lemonade. Such products currently are taxed as beer, at a rate of 20 cents per gallon; the rate for distilled spirits is $3.30 per gallon. Although the ostensible aim is to discourage underage alcohol consumption, this 1,550 percent tax increase would fall primarily on adults. Not only that, but according to Bill Leonard, one of two Republicans on the Board of Equalization who voted against the hike, the legal reasoning for recategorizing "alcopops" applies to virtually all beer and wine sold in California:

When the Legislature wrote the first alcohol laws after Prohibition was repealed in 1933, California defined what a beer is and what wine is. The definition was simple—anything added to beer or wine renders it something else. Sometime thereafter beer and wine producers started adding things such as preservatives, flavor enhancers and other things. So narrowly reading the law there is NO such product as either beer or wine sold in California today. Now common sense and alcohol regulators know that is not true and so for years have ignored this narrow interpretation.

Last week [on December 13] a bare majority of the Board of Equalization voted for the narrow interpretation of the law, and have begun the process to tax all alcohols with any additives as distilled spirits. This will increase the taxes charged on beers, wines, flavored malt beverages, and flavored beers to the level on hard liquor.

The dated California law defines beer as having no additives whatsoever. No beer that I know of— except perhaps some home brews—meets this definition.

I think Leonard overstates things a bit. Some microbrewers brag about not using preservatives, so any of their products that contain only water, malt, and hops, with no added flavorings such as spices or fruit, would still count as beer under a narrow reading of the law. Likewise, preservative-free wines presumably would still count as wine. But assuming Leonard's understanding of the law is correct, the vast majority of commercially produced beer and wine would be taxed at the liquor rate if the Board of Equalization consistently applied its new standard.

Even assuming the board somehow manages to raise the tax only on the politically incorrect "alcopops," the results would be nonsensical. "When you're selling a product that is flavored with distilled spirits, that you're marketing as distilled spirits, I think common sense dictates that it should be taxed as distilled spirits," board member Steve Westly (the outgoing controller), tells the Los Angles Times. "I see no public policy rationale why we should provide a lower tax rate to companies that are promoting distilled spirits to young people in California."

First of all, the argument against "alcopops," which Westly seems to have temporarily forgotten, is that they appeal to teenagers (especially girls) because they don't taste like booze. Although some of these products taste a little like whiskey (Jack Daniel's Country Cocktails) or tequila (Sauza Diablo), they typically do not contain any distilled spirits, relying on fermented malt stripped of its natural flavor for their alcohol content. Bacardi Silver, for example, contains no rum, and Smirnoff Ice contains no vodka.

In any case, the rationale for taxing liquor at a higher rate than fermented beverages such as beer and wine is that liquor has a higher alcohol content, usually around 40 percent. The "alcopops," by contrast, generally have an alcohol content of around 5 percent. So if the Board of Equalization's tax hike plan is implemented as advertised (i.e., limited to "alcopops"), California will be taxing drinks with a 5 percent alcohol content at a much higher rate than beer, which can have an alcohol content twice as high, or wine, with an alcohol content up to three times as high. Putting aside the question of whether this is good public policy, it is clearly contrary to the legislature's intent in distinguishing between fermented and distilled alcoholic beverages. If critics of "alcopops" want to tax the hell out of sweet, flavored malt beverages, they should ask the legislature to do so, instead of reinterpreting the law to fit their agenda.

Comments

:-|12.27.06 @ 1:11PM|#

As it fails all logical tests, one must conclude that it's a simple revenue-raising scheme posing as a "common sense" reinterpretation of existing laws with some odious social engineering aspects added for just that right stench. Brilliant!

|12.27.06 @ 1:15PM|#

Jake, let me compliment you on your awesome knowledge of girlie drinks. But don't get me wrong. If this tax would apply to Olde English and/or Mickey's Malt Liquor, I'm totally against it.

|12.27.06 @ 1:33PM|#

The basic premise is, as always, anything enjoyable is bad.

|12.27.06 @ 1:45PM|#

You know I used to think that girls who liked beer were hotter, as well as cheaper to entertain. Now I worry that they will raise the price of Heineken.

Rhywun|12.27.06 @ 2:00PM|#

German beers have contained no additional "non-beer" ingredients for centuries, by law.

Dan T.|12.27.06 @ 2:01PM|#

Many of these "hard lemonades" are the alcohol industry's versions of flavored cigarettes, which are thinly veiled attempts to market to children. The more we tax it, the better. But I know anything to make the streets safer for our children is frowned upon around here.

|12.27.06 @ 2:02PM|#

California will be taxing drinks with a 5 percent alcohol content at a much higher rate than beer, which can have an alcohol content twice as high, or wine, with an alcohol content up to three times as high.

I don't know of any beers that have 10% alcohol content (someone tell me which beers these are if you know), but Sullum's basic point is sound.

If the goal is to tax in proportion to alcohol content, why not write the law so that the tax is automatically levied that way?

For example, it could be something like: "$0.10 tax for each once of alcohol sold". So a 40oz bottle of beer with 5% alcohol would have $0.20 tax; and a 40oz bottle of vodka with 40% alcohol would have $1.60 tax.

Who cares what fruits, flavoring, or other additives are in the drink?

|12.27.06 @ 2:13PM|#

BG:

Various craft brewed beers and ales, especially Barley wines, hit the 10% alcohol-by-volume mark.

Read this article here, or check the updated chart.

Kevin

|12.27.06 @ 2:19PM|#

Scaldis Noel

hic

|12.27.06 @ 2:21PM|#

Here's another article concerning very strong beers, courtesy of Beer Advocate.

Kevin

Sam Franklin|12.27.06 @ 2:23PM|#

Clearing the (rented) store shelves of these high margin, pukey tasting drinks is probably good for consumers. there will probably be more consumer choice and more meaningful consumer choice when these malt beverages are taxed out of the market. Having 26 kinds of puke to try to catch a buzz from is not a real choice. If the free hand of true capitalism had any influence on liquor sales in North America, Zima would have been a forgotten experiment instead of the wave of the future. Even if you are such an RCD-hed that you fail to see market failure anywhere else -- it is just too clear here to miss.

|12.27.06 @ 2:23PM|#

This chart works for kevrobs's comment.

Thomas Paine\'s Goiter|12.27.06 @ 2:27PM|#

I don't know of any beers that have 10% alcohol content (someone tell me which beers these are if you know), but Sullum's basic point is sound.

Every barleywine I've every encountered is at least 11% ABV. All brewed like beer and treated as beer under the law.

As for normal, somewhat traditional brews:

The Dogfish Head 120 Minute India Pale Ale is 21% ABV

The Dogfish Head 90 Minute IPA is 9% ABV

Stone Brewing's Double Bastard Ale is 10% ABV. Stone's Bourbon Barrel Stout is 10% as is their Imperial Russian Stouts.

Victory Brewing's V-12 Quadruple Bock is is 12% ABV. Their Golden Monkey Triple Bock is 9.5 ABV. Their Storm King stout is 9.10%

The famous Belgian Ale Delirium Tremens is 9% ABV.

Stoudt's Douple IPA is 10%.

|12.27.06 @ 2:27PM|#

Thanks, high#!

Kevin

Thomas Paine\'s Goiter|12.27.06 @ 2:29PM|#

Kevrob, did you subscribe to BA's magazine?

|12.27.06 @ 2:40PM|#

Rhywun | December 27, 2006, 2:00pm | #
German beers have contained no additional "non-beer" ingredients for centuries, by law.

Which is why no hefeweizen was been brewed in Germany until relatively recently. It contains wheat, a clear violation of the Reinheitsgebot. It wasn't until the mid 1800s that the law was relaxed enough to allow for brewing of wheat ales. Just because the law says it's a good thing doesn't make it so.

The Dogfish Head 120 Minute India Pale Ale is 21% ABV

Pussy beer. At 24%abv, Sam Adams Utopias is a real beer.

|12.27.06 @ 2:42PM|#

OK TPG, I don;t get this:

The Dogfish Head 120 Minute India Pale Ale is 21% ABV

The Dogfish Head 90 Minute IPA is 9% ABV

It seems to me it would take me 120 minutes to get drunk drinking the 90 Minute IPA and 90 minutes to get drunk drinking the 120 minute IPA (actually it would probably only take me 60 minutes). Sounds like false advertising to me.

Thomas Paine\'s Goiter|12.27.06 @ 2:45PM|#

Pussy beer. At 24%abv, Sam Adams Utopias is a real beer.

Except that Utopias tastes like shit.

|12.27.06 @ 2:50PM|#

Isn't the primary effect of this tax going to be pushing sales into wine and beer? If it's two-thirds the cost to make a wine cooler from wine, juice and spritzer, versus buying an alcopop, I know what a lot of young drinkers are going to do...

|12.27.06 @ 2:50PM|#

"...anything to make the streets safer for our children is frowned upon around here."

I, for one, advocate paving the streets with broken glass. And twentyfive cent cans of beer in vending machines.

creech|12.27.06 @ 2:52PM|#

Dan T., where does one draw the line in making things "safer for children?" I'm certain a case could be made that closing playgrounds and public pools would make things safer. So would tearing down the public skateboard ramps, denying kids the right to ski, and banning Little League baseball and Scout camping trips. So, at what point is it irresponsible of government to not create "safer" conditions for our kids?

Thomas Paine\'s Goiter|12.27.06 @ 2:52PM|#

It seems to me it would take me 120 minutes to get drunk drinking the 90 Minute IPA and 90 minutes to get drunk drinking the 120 minute IPA (actually it would probably only take me 60 minutes). Sounds like false advertising to me.

The numbers indicate the scale on the Internation Bitterness Unit scale.

And the 120 Minute would probably take you about 20-30 minutes to get hammered, considering each is like drinking four beers. If you put two of those away inside of a half of an hour, you're not feeling much of anything.

Thomas Paine\'s Goiter|12.27.06 @ 2:54PM|#

Isn't the primary effect of this tax going to be pushing sales into wine and beer?

The primary effect is going to be pushing kids back to drinking 40's of malt liquor and mickey's big mouth.

If it's too expensive to drink something you like, go for the biggest bang per dollar spent.

|12.27.06 @ 3:15PM|#

Goddamit, creech!

We had done so well! What, like 15 comments and no one had fed the troll!

You must be new here I suppose, so I'll forgive you. But DON'T FEED THE TROLLS! Dan T. is the resident troll around here, along with his fellow idiot Juanita.

Thomas Paine\'s Goiter|12.27.06 @ 3:16PM|#

Anyone notice that they are claiming they are doing this because teens are asking for it?

Awesome. MADD and some youth ministry chases together 11 goody two-shoes and the state changes the law, "based on that".

|12.27.06 @ 3:23PM|#

"MADD and some youth ministry chases together 11 goody two-shoes and the state changes the law, "based on that"."

Don't forget the graphical representation of data which clearly imply causation.

Sam Franklin|12.27.06 @ 3:46PM|#

Isn't the primary effect of this tax going to be pushing sales into wine and beer?

Glad someone agrees with me.

Warren|12.27.06 @ 4:07PM|#

Just another reason to brew at home

Thomas Paine\'s Goiter|12.27.06 @ 4:09PM|#

Warren,

You brew hard lemonade at home?

|12.27.06 @ 4:31PM|#

Although the ostensible aim is to discourage underage alcohol consumption, this 1,550 percent tax increase would fall primarily on adults.

I don't care what age you are, if you drink Mike's Hard Lemonade, you are not an adult.

Warren|12.27.06 @ 4:56PM|#

TPG,
Ugh, no. However, by home brewing I avoid the entire beer section when shopping and therefore am spared being subjected to so much as having my eyes land on that dreadful stuff.

G.O.D.|12.27.06 @ 7:33PM|#

1) There shouldn't be sin taxes on alcohol to begin with, let alone arbitrary sliding scales (pipe dream I know).

2) Since they do have these taxes, they should absolutey apply to those disgusting, sweet candy-ass malt beverages. If you're going to drink, drink for real damnit.

RSDavis|12.27.06 @ 8:25PM|#

Actually, I got some info from an Anheuser Busch rep that they are desperate to get people to drink beer again. Apparently, these fruity drinks are popular with everyone, not just teens.

- R

RSDavis|12.27.06 @ 8:58PM|#

So, what I am saying is, perhaps the beer companies are behind this?

- R

:-|12.27.06 @ 9:06PM|#

Or...
It's simply a scheme to raise revenues.
Sometimes a tax hike is just a tax hike.

|12.27.06 @ 9:22PM|#

Ok thakns kevrob, highnumber, & TPG. Maybe I'll check my local grocery store for some of those brands.

And I have to dissent from the semi-consensus of contempt for drinkers of sweetened alcohol drinks which has been developing in this thread. (Does that make me some kind of troll who ought not be fed?)

|12.27.06 @ 11:06PM|#

I'd drink beer by the case if it didn't taste like, well... beer.

Thomas Paine\'s Goiter|12.27.06 @ 11:22PM|#

I got some info from an Anheuser Busch rep that they are desperate to get people to drink beer again.

The macros are losing market share hand over fist. They are desperate to get people to drink shitty macro beer made with rice again.

Wild Pegasus|12.27.06 @ 11:32PM|#

Dogfish Head 120 Minute IPA isn't much of an actual drinking beer. It's more of a bizarre chemistry experiment. The 90 Minute is a delicious beer that's actually drinkable, and it will fuck you up quick if you don't pay attention.

- Josh

Rhywun|12.27.06 @ 11:32PM|#

I like Zima. (duck)

|12.27.06 @ 11:33PM|#

"And I have to dissent from the semi-consensus of contempt for drinkers of sweetened alcohol drinks which has been developing in this thread. (Does that make me some kind of troll who ought not be fed?)"

Nah. It's just the usual libertarian gnarliness.

If you said that the government should prohibit [or alternatively, make compulsory] sweetened alcoholic beverages, THEN you would be a troll.

|12.28.06 @ 11:46AM|#

(Throws Jolly Ranchers at Rhywun)

Good thing you ducked.

I tried Zima once. It tasted like the months-old clear Pepsi I mistook for water once after digging postholes all day.

Beer does taste like beer, to me a good thing, to others, I guess not.

I think your best bet, cost wise, is usually the strongest liquor you can get your hands one. Those resorting to Everclear are advised to be careful. Just because you can pound several shots of it when you've already had 2 40s of OE doesn't mean you should. Or so I heard.

Rhywun|12.28.06 @ 3:51PM|#

Good thing you ducked.

It helped that the supermarket I worked at was practically giving them away at $5 a six-pack to dump the supply that nobody was buying. I drank that shit like water for a year.

Sam Franklin Bein\' Sarcastic|12.29.06 @ 10:49AM|#

dump the supply that nobody was buying

But the free market is responsive to consumer wants and needs. The situation you describe simply cannot exist. The supermarket would never allow it to continue to exist. I think you may have dreamed this irrational supermarket into noumenal existence, but no real supermarket would waste valuable shelf space in this manner! esp not in the liquor aisle!

|12.29.06 @ 2:44PM|#

But the free market is responsive to consumer wants and needs.

In this case it responded by dropping the price in order to sucker Rhywun into taking care of their supply for them :)