Ohio Knows Best?

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If Governor Bob Taft (Republican) gets his way, Ohio will double the excise tax on alcohol from 18 cents to 36 cents. Beer drinker Fred Lisy promises the new tax will not keep him from drinking, "It's just the principle of being taxed like that. It's distateful."

He's referring not just to the new alcohol tax, but to sin taxes in general. Such levies are easy to impose because they punish unpopular goods or services (smoking, drinking, etc.) that most people have no problem condemning. That makes them an ugly combination of paternalism, social scapegoating, and—given that they are mostly used in times of budget shortfall—fiscal irresponsibility. They're great if you want to pick on drinkers or punish small businesses, but not if you want to respect your citizens' freedom.

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  1. Just another politically painless way to raise revenue, similar to increasing speed limit enforcement.

  2. Ben,
    The way you wrote the set-up, I expected the last paragraph to be, “Now let’s open our hymnals to page …”

  3. There is a respectable argument for taxing activities that produce “public bads”, isn’t there?

  4. DavidS,

    First you must define “public bads” and explain why it makes more sense to tax those rather than everyone equally/proportionally.

    Such taxes are easy because it allows for people to get services they want while shifting the cost to those who are “morally inferior”.

  5. Sheesh. Is it a requirement that in order to be a politician, you have to have absolutely zero knowledge of economics?

  6. dave b:

    They know enough to tax items with relatively inelastic demand (cigarettes, gas, alcohol, etc.) since the increase in price won’t result in that much less of the good being bought but brings in a good amount of revenue.

  7. Applied Welfare Economics does have the concept of the negative externality (pollution is the most common example). The typical advantage of the market is that all the costs of the transaction are borne by willing participants. This is not the case where a negative externality exists, and thus we as a society tend to overconsume.

    The idea behind all of this may be to impose a “Pigouvian tax”. That is a tax which increases the overall cost, such that the social and private costs of the transaction are equal. I think a case can be made for alcohol, where there a strong externalites from violence, drunk driving, ect…(Things like liver disease would not be included as an externality because they are included as a private cost of the transaction). The case for smoking might involve second hand smoke, though that’s doubious in light of research that says smokers may actually save society money in the long run by living shorter lives and thus don’t cause as much medical expenses (in this case, maybe we should subsidize ciggerettes?)

    Generally, I think that an earlier writer is correct that these things are done because they are simple to administer and because all taxes which are not “lump-sum” taxes are distortionary it is easier to justify those things that are not popular. In any case, I wanted to point out, however, the is actually a case for some sin taxes.

  8. My Ohio Libertarian brothers and sisters,

    Help a poor, alcoholic Ohioan out: Check out

    http://www.stopthebeertax.com/

    and tell your legislators you don’t want more taxes on alcohol! Another tax will just make the poor people in our state poorer (and cause you to suffer through more urban blight, even if you don’t drink and it doesn’t directly affect you). The tax will harm you one way or another. Let my people go.

  9. matt:

    Yeah, I know, but I am jaded because here in Louisiana, our Governor plans to raise sin taxes to provide a teacher pay raise. Not only am I appalled at this bit of social engineering, but also to think that a raise could be done on the back of a declining source of revenue is preposterous. Most governments tend to make wildly irresponsible projections about how much revenue these taxes will bring in, conveniently ignoring the fact that many people will reduce their usage or stop altogether, or just buy items from other states or the internet. Depending on sin taxes to plug budget holes is irresponsible, and just leads to more taxation down the road when the proposed revenue does not materialize.

  10. Yeah, but this is Ohio. I mean, if you don’t have a brewski in your hand, you might as well be wearing a dress.

  11. Bob Taft doesn’t need (Republican) after his name. Now, if he ever did start governing like a Democrat, then he could use a (Holy Shit He’s Acting Like A Democrat) after his name.

  12. matt:

    Good point about inelastic revenue sources. I wonder if people would resort to cheaper alcohol if the prices go up too much. If this is the case (heh heh), then it’s certainly good news for Milwalkee’s Best and Mad Dog.

    ….ich…

  13. So is this part of some master plan to put Ohio’s economy even deeper into a craphole?

  14. It`s “click it or ticket” week in Texas.They will nail you for $200 for not protecting yourself.
    I figure in a couple of years it will be mandatory
    2 year slammer sentence for NOT CLICKING.
    CLICK,CLICK,CLICK sounds like beer tabs poping.

  15. Speaking of sin taxes, has anyone in Congress proposed cutting federal taxes on gasoline lately?

  16. Yeah, here in VA, it’s also “click it or ticket” time. I was listening to the cruddy local NPR news blurb yesterday, and I almost spit up my beer all over the steering wheel (heehee!). They had some assfuck state trooper on, talking about how, last Mem Day Weekend, a dozen people died in VA in auto accidents. And, so, in response, they’re re-doing the “click it or ticket” program yet again. Whuh? Fuckheads. I got a speeding ticket last year during “click it or ticket” time. It was arguable, given the location of the speed limit signs right off the interstate ramp, but when I tried to explain to the officer, he said, “oh, with ‘click it or ticket’, I am forced to give you a ticket no matter what. If you want to argue, you have to go to court.” Sure, like I’m going to drive 2 hours each way and waste an entire day of work over $120. I can’t help but wonder, how does removing discretion from officers help anything?

    But I digress…

    I think there should be a tyranny tax. Every time a legislator anywhere passes legislation that robs me of my liberty or property, they are slapped with a tax, for life. If they’re so interested in taxing our “unsavory” activities & products, then I’m going to tax THEIR unsavory activities.

  17. Mr. NG:

    Did you mean Red Dog? Not that I would touch that or the Beast with a ten foot pole…..

  18. I’m with you, Smacky. Let’s also remember that Ohio is all about regressive taxes to raise money, e.g. banning casinos to prop up the state lottery.

  19. and I almost spit up my beer all over the steering wheel (heehee!).

    Further confirmation that Evan Williams is pure evil – a sentiment I’ve harbored for a while. (And also why I’m secretly smitten in love with him.)

  20. matt:

    Nope. Mad Dog. Check out this site:

    http://www.bumwine.com/

    I was “encouraged” to drink Mad Dog during my batchelor party.. on my wedding day I felt like my head was getting stomped by Marines and everything seemed like it was lit by a glaring fluorescent light.

    In other words, don’t drink the shit, even on a dare. Please, in the name of the baby Jesus..

  21. They still haven’t figured out how to tax home-brewed beer.

    American anti-tax advocates need to brush up on their Gandhi. If the government taxes your salt, go make your own. If the government taxes your cloth, go spin your own. If the government taxes your beer, go brew your own (okay, that last one’s not Gandhi’s, but I think it’s in the spirit).

    We need to stop complaining about how much the government wants to steal from us when we’re being too lazy to install our own anti-theft devices.

  22. Needless to say, Northern Kentucky beer and liquor dealers do a great business just across the river from Cincinnati.

  23. Brain dead in O-Hi-O

  24. Mr. NG:

    I’ve never heard of that before (looks like I’m not missing anything). Based on your reccomendation and experience, I’ll be sure to stay away from it. Knowledge is power.:)

  25. Ruthless,

    Yep. Wow. Lot o’ Greater Cincinnati kids in these parts, eh? I knew about ruthless. Smacky, too?

    At least I’m on the free side of the river …

  26. Jason Ligon,

    If you consider Cleveland to be part of Greater Cincinnati, well, ok, then I’m in Greater Cincinnati. But that does seem a bit of a grandiose stretch, from a Clevelander’s standpoint. ^_^

    Then again, Cincinnati is populated heavily with Germans, right? Are you trying to tell me Cincinnati folk need more lebensraum ? Well, I’m sure Cleveland politicos would be happy if Cincinnati usurped Cleveland. At least that way somebody could take blame for it then.

  27. Smacky,

    Oops. I don’t know why I jumped from Ohio directly to Cincinnati. Brain lock …

  28. Jason,

    You must’ve been thinking about police brutality . That’s another thread entirely.

    Thank you! I’m here all week!

  29. matt – oh yeah, Mad Dog is beloved here in AZ by homeless folks of all stripes. I’ve never had the pleasure, but when the only people you see drinking it you also see passed out in a ditch somewhere, in the middle of the day, in the middle of a hot AZ summer, you figure it’s a good idea to stay away from it.

  30. Mad Dog 20/20. Ugh, another flashback from my old college days. It’s the malt liquor of wines. smacky, I suggest that you start a riot in downtown Cleveland ala Al Bundy to protest the beer tax.

  31. matt – oh yeah, Mad Dog is beloved here in AZ by homeless folks of all stripes.

    I see more of them drinking that Steelcase Reserve (something like that) Malt Liquor. Then again those are the ones that are still vertical.

    I just wish more of the homeless were good old-fashioned winos and not the vampire-like tweekers that seem to grow better than weeds after a rain out here.

  32. “I just wish more of the homeless were good old-fashioned winos and not the vampire-like tweekers that seem to grow better than weeds after a rain out here.”

    I have a theory about tweekers and border states.

    …Tweekers suck!

  33. According to this Cincinnati Enquirer article, there’s a budget proposal in the Ohio Senate that doesn’t include the beer tax. That proposal, however, would increase the cigarette tax by $.70 per pack. It seems our senators want to pit drinkers and smokers against each other.

    Let’s also remember that Ohio is all about regressive taxes to raise money, e.g. banning casinos to prop up the state lottery.

    Ohioans for Local Option is working to put a constitutional amendment on the ballot that would allow municipalities to vote on whether to allow casino gambling. They need about 322,000 signatures by August 10. I don’t think they have a website yet, but if you want more information, or would like to help, you can call (216) 556-0890.

  34. Speaking of Ohio, do any Ohio-area Reasonoids want to get together? I live in Cleveland, but I’m going to be in Cincinnati this weekend.

  35. I have a theory about tweekers and border states.

    So do I. The (southern) border states are warm and the odds you’ll freeze to death at any point are pretty slim. It just makes it that much easier to fall off the edge of the earth when you don’t even have to keep your act together enough to not die from exposure.

  36. Speaking of Ohio, do any Ohio-area Reasonoids want to get together? I live in Cleveland, but I’m going to be in Cincinnati this weekend.

    Sure, I would. PintofStout and some other Ohioans were talking about getting together sometime on another thread a while ago. But I can’t go to Cincinnati. At least not this weekend.

  37. smacky,
    We need to set a time and place near Sinincincinnati, but we need more notice.
    Maybe we could be a subset of one of my atheist group meetings. That’s usually the last Tuesday eve of a month.

  38. So who does the invocation at those athiest meetings, Ruthless?

  39. “So who does the invocation at those athiest meetings, Ruthless?”

    Red Green.

    “We’re all in this together. I’m pullin’ for you.”

    I’m a man, but I could do better. With duct tape. I guess.

    Why do you ax, Douglas?

  40. Anyone who is interested in meeting in northeast Ohio, send me an e-mail.

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