Alcohol

How Highly Taxed is Your Beer?

And how much smuggling do those taxes cause?

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Politicians have always had a complicated relationship with alcoholic beverages. On the one hand, they really like skimming money from the stuff (at one point as much as 40 percent of federal revenues came from taxes on booze); on the other hand, they really hate that people take pleasure in drinking instead of…say…reading up on the great deeds of people who hold public office. Their go-to solution on both counts is to impose high taxes on beer, wine, and liquor so as to discourage their consumption and fund government services from their consumption.

No, that doesn't make sense. You've met these people before, right?

Anyway, the Tax Foundation compiled a handy map of beer taxes in these here United States. The map lists taxes per gallon of suds and ranks the states from highest (Tennessee at $1.29 per gallon) to lowest ($0.02 per gallon in Wyoming).

What the Tax Foundation map doesn't go into is the fact (shocking, I know) that with alcohol as with cigarettes and just about every other portable thing you can imagine, high taxes encourage smuggling from places where taxes are lower to places where they're higher.

In 2007, the Michigan Liquor Control Commission reported (PDF) that alcohol smuggling contributed to a "conservative annual estimate of $14 million dollars in loss to the state" in revenues. Indiana and Wisconsin (PDF) were fingered as the major sources. Despite the bulky nature of the stuff relative to liquor, that included "millions of out-of-state cans and bottles" of beer from just one smuggling ring.

After surveying the long and world-wide history of alcohol smuggling, the report recommended x-ray scanning trucks that enter Michigan, but didn't touch on lowering taxes (currently $0.20 per gallon in the wolverine state) to match the rates of its neighbors ($0.12 per gallon in Indiana and $0.06 per gallon in Wisconsin). I'm just guessing here, but I'll bet that smuggling continues no matter how many x-ray machines the state has since purchased.

Update: Britain's Institute of Economic Affairs reported in 2012 that high alcohol taxes don't discourage drinking. "[T]his research shows that the amount of drink consumed in high tax countries is exactly the same as in low tax countries." Taxes just fuel black markets, including smuggling and illegal production.

Below, Reason TV celebrates moonshine, the beverage that owes its very existence to the desire to evade tax collectors.

NEXT: A new twist on asset forfeiture

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  1. Beer taxes are quite low if you brew it yourself.

    1. “An interesting point”

      *clicks ballpoint, writes note in notebook*

      /Revenuer

      1. I steal all my beer, to maximise my savings

    2. Beer taxes are even lower when you don’t drink beer.

      1. Yeah, but whatever girly shit you non-beer people drink is taxed at the same rate or higher. Or do you not drink?

        1. Paleo-tequila.

      2. No, the beer taxes would be exactly the same whether you brew it yourself or don’t drink. Now, sales taxes on the ingredients may be higher.

        1. most of the components of beer are “non-taxed food items”, thus no tax is paid on the ingredients. SOME states do tax food, though. It would be interesing to compare the various categories of taxed goods by state.

      3. Yeah, but the hard liquor taxes are worse.

    3. Not true, if you then sell it.

  2. I think there is a problem with the map. How can Wyoming be the lowest at #50 when there are 50 states plus DC?

    1. There are a lot of ties.

    2. Missouri and Wisconsin are listed as both being #48, tied at $0.06.

    3. DC’s rank is #9 in parentheses, which implies that it would be #9 if included among the states. Maryland is the actual #9 among the 50 states, between NC and FL.

  3. …high taxes encourage smuggling from places where taxes are lower to places where they’re higher.

    Making their way the only way they know how; that’s just a little bit more than the law will allow.

    1. So we aren’t gonna do what they say can’t be done?

      1. It is a long way to go, and a short time to get there.

      2. Stop crossing the streams!

        1. I love it when a plan comes together!

        2. Buford T. Justice: [shouting at a trucker that has sheered a door off of Justice’s patrol car] I saw that, you sombitch! You did that on purpose! You’re going away till you’re gray! I got the evidence!

          Buford T. Justice: [speaks to Junior] Put the evidence in the car.

          Junior: But Daddy…

          Buford T. Justice: Put the *evidence* in the *car*!
          [shouting to trucker again] Buford T. Justice: I’m gonna barbeque yo’ ass in molasses!

          1. My name’s John Lee Pettimore.

        3. Where’s Gator when ya need’im?

  4. A gallon? What is this, gas? It should be. Wait. SLD, it shouldn’t be taxed. But if it were, it should be like $0.20 a barrel, not a gallon. How in the fuck can states be low on money?

    1. dey dun spent it awl

  5. We’re not #1!

    /NY

    1. Of course not! New York wants you to drink plenty of cheap beer. Then we’ll get your money.

  6. I am neither ashamed nor proud of California.

    1. It’s doing better than the entire south east. So there is that.
      *gently gives playa a shot in the arm*

      1. Owwww!
        *pulls beer from fridge*

        1. PA is only $.08? That’s because smokers subsidize beer drinkers.

    2. Scotch is so cheap and plentiful in SoCal. Compared to the selection of single malt scotches in Total Wine & More, the Boston area seems like the Soviet Union food desert. I “smuggle” a few bottles every time I check luggage.

      1. Dude, just drive to a Yankee Spirits. They have an amazing selection of…everything.

      2. Every time I’m in MA, I forget that I have to go to a special store.

        1. The Democrat Machine that has run the State since the early days of JFK’s career pleases the residents of the Peoples’ Republic of Boston, and runs everything else into the ground. I expect that most of the Kennedys and their friends bring the stuff in tax free on their yachts. And THAT isn’t REALLY smuggling, of course.

          John, Robert, Teddy. Two out of three, butt the third did a lot of damage.

  7. Isn’t booze taxes how the country was originally funded? Where the hell is John? He usually gives me the history lessons round here.

    1. Yes it was. And it gave us the “Whiskey Rebellion” too.

    2. Google “Whiskey Rebellion.”

    3. The income tax is finally what allowed the Federal government to fund itself apart from alcohol and make Prohibition actually viable.

  8. Hey, you should do a map of the taxes on hard liquor instead of beer, and watch Washington rocket straight to the fucking top.

    Guess how much a 1.75L $7.99 bottle of cheap vodka is after Washington’s liquor tax, liquor volume fee, and sales tax are added on? $18.

    1. It’s insane. We’re not certain why you people haven’t risen up and eaten Gregoire.

      1. Inslee is governor now. And you ask a very valid question that I also ask a lot. I can’t seem to get a satisfying answer. People went from having state-run liquor stores with less tax (but still a lot) and terrible selection to private liquor sales and great selection with even higher taxes. I guess the answer is “you’d be surprised what people will tolerate within certain bounds”.

        1. something, something frogs…something, something, boiling water.

    2. Why would anyone pay that when Canada and a bunch of Indian reservations are right there?

      1. Um…. the DHS and the Washington State Patrol?

      2. Or hair spray? You can drink hair spray.

      3. “Right there”? You mean three hours away? Sure, I can go to Oregon and get booze and pay no sales tax. I could go to Canada and hit the duty free shop. I could go out east to Idaho and have the tax go down to 6%. But all those options require a minimum of three hours (5-6 in the case of Idaho) of driving and gas. I think that would take the savings right the fuck out of my purchase.

        Now, if I’m in one of those places for any other reason, yeah, I stock up. On smokes too (they’re vastly cheaper in Idaho, not so much in Oregon and certainly not in Canada).

        1. You plan ahead, dummy. If it’s worth it for Canadians to make the trip from Toronto to the outlet malls in Grove City PA (PA has no sales tax on clothes), then a committed dipsomaniac like you has no excuse for not planning ahead on your booze purchases.

          1. My truck gets 15 mph at best. It’s not worth it for me to make otherwise totally unnecessary trips to Portland (as much as I like Portland), and I’m certainly not enduring the border shit in order to go through duty free to Canada. There is no planning ahead. Remember that Seattle is practically in the middle of WA, for all that it’s “on the ocean” because of the Sound.

            No, I just have to fulfill my alcoholic needs here in Seattle most of the time. At least my weed is cheap and excellent. But that’s because I don’t buy it in the dispensaries and pay 25% tax.

            1. Why don’t you just drink moonshine and spare yourself the hassle?

              1. Epi’s too fancy for corn likker. Well, except for when he gets the shakes and sees Ol’ Pinky, but then a quick slug of antifreeze will tide him over till he can knock off a gas station and steal some Boone’s Farm.

                1. Everything Warty said is 100% correct.

      4. Portland. Everyone I know just happens to already be shopping in Portland when suddenly struck with the knowledge that they’re running low on vodka.

        The PNW fucking blows for moving. It’d been fifteen years since I lived in this state, and back then all the liquor stores were state-owned. Move back, and can’t find the liquor store. I expected them to be state-run, shitty and expensive, but I didn’t expect to hear they jacked the prices up while also having Safeway and Fred Meyers handle all the sales.

        You can buy on Sunday though. My husband was convinced you couldn’t. I reminded him he comes from a land where Good Friday is a bank holiday.

          1. Voodoo’s.

            1. Did they have the food truck pods when you were there?

              Entire square blocks of food trucks. There were about 40 right next to the downtown Westin when I visited for a bachelor party. I was drunk for 3 straight days, and I must have had Lamb Gyros with hot sauce at least 10 times.

              1. Not that I saw. I shop in Portland, it’s nearby, but since I hate shopping it’s usually that tunnel-visioned focus on plowing through the list so that I get rewarded with going home. I might have missed it.

                Did you try Voodoo’s? Their reputation is well-earned. A bacon maple bar on top of a night of soused revelry is far better than stale pancakes at Shari’s.

    3. I’m still trying to figure out how come I have to pay federal excise tax on Titos vodka that never leaves the state of Texas.

      1. Because Commerce Clause, FYTW and Wickard.

      2. Because FYTW.

      3. By drinking Texas liquor in Texas, you’re depriving out-of-state distilleries of your custom, obviously!

      4. It’s in the Constitution. They are specifically authorized to collect excise taxes and liquor has always been among those they collect. No commerce clause needed.

        1. Never mind. On further investigation, you are right. Excise need not cross a state border to be eligible.

        2. Never mind. On further investigation, you are right. Excise need not cross a state border to be eligible.

    4. Fuck you, Epi. I’m in Illinois and we’re number 1!

      “Consumers who Drink. In most cases, a 750 ml bottle of spirits is going to cost at least $2 more, perhaps $3, regardless of the bottle’s pricepoint, and before sales taxes. In Chicago, for example, once you factor in the federal, state, county and city manufacturing taxes, as well as sales taxes, more than 25% of the cost of a $30 bottle of spirits is tax – not money to the manufacturer, distributor, or retailer – taxes.

      Liquor stores near the border with another state that has lower taxes. Wisconsin is $3.25 per gallon, Indiana is $2.68 per gallon. Illinois is $8.55. The difference translates to a few dollars per bottle – in each case, it’s over $1 per 750 ml bottle in tax, before markups. People near borders will cross them and stock up, even if doing so is technically illegal. So we’re sending business to our neighboring states.”

      1. Yeah, Illinois’ flat out liquor excise tax (not counting local taxes, Federal taxes, or taxes on alcohol outside of the excise, like additional sales taxes) is 31% higher than any other state in the country.

        We’re a full third higher in our liquor tax rate than second place.

        1. I am now reconsidering whether I should move to Chicago should I get offered a job there in my current interviewing process.

          1. Take the job and don’t live in the city.

      2. I don’t know, dude. That article is from 2009…before WA privatized. So our taxes went up since that was written. WA may well be #1 at this point. Did you look at the numbers I posted above? In that case (and it changes as the liquor becomes more expensive because the liquor volume fee is fixed, not a percentage), more than 50% of the cost of the bottle is taxes/fees.

        SO SUCK IT. Or don’t, because I’m the one paying the inordinate taxes and fees.

        1. http://taxfoundation.org/blog/…..state-2014

          WHAT THE FUCK?!?!

          Illinois’ tax rate hasn’t changed since 2009 and we’re now #14.

          You’re right, you are number 1 and you’re 4x higher than Illinois now.

          1. TOLD YOU

            It’s really fucking bad. Like HoD says above, I don’t understand how people haven’t rebelled.

          2. Interesting that liquor taxes really don’t correspond to any red/blue state division.

            1. I think the reason for that is because many blue states have the TAX EVERYTHING ethos of the progressives and red states have historically not liked booze for religious reasons. As a result, you get high taxes in red and blue states for different reasons.

            2. Yeah, the map has no obvious correlation to other tax rates.

              Also, NH has “no” taxes because they have state stores. Surprisingly, the stores aren’t that bad for state run enterprises / SLD.

              1. Yeah, as much as I don’t think the state should be doing it, I have to say that the NH stores are quite good on selection and price. And many of the people who work in them are pretty friendly. And you can get beer and wine at regular stores, which is good.

          3. Well, I’ll be making more day trips to West Virginny in the near future.

      3. The few times I buy spirits I buy in Indiana. I buy beer in Illinois because Indiana beer prices are high and the fuckers are closed on Sunday, which is a tax in itself.

    5. Liquor is usually taxed per gallon of pure alcohol too. I think even when you pay $7.99 for a cheap bottle of vodka almost half of it is federal tax.

      1. The federal excise tax is #13.50 per proof gallon, which is a gallon at 100 proof.

    6. You should see the prices in the Nordic countries. Here is a list of vodka prices in the Finnish alcohol monopoly.

      Unsurprisingly, a lot of folks in the Helsinki area hop on the ferry to Tallinn and buy at the ferry terminal to take back.

      1. I think Iceland is the worst. And they drink a lot. Home distilling is very popular (and illegal) in those countries.

        1. Iceland is bad, but then again, everything in Iceland is stupid expensive. The alcohol is actually not disproportionally higher than their other high prices on everything. It’s the food that really gets you. I swear you can’t get a cup of coffee and a bagel with cheese at the Loki Cafe for under almost $20 (I’m not kidding, it’s at least 2000 ISK and that’s $15, and I’m pretty sure it’s actually more ISK than that).

          You pretty much cannot get dinner out for less than $100 unless you really make an effort. It’s a beautiful, nice place but FUCK is it expensive. But you can get whale, and that’s a major plus.

        2. The last time I did a comparison search just for kicks among the Nordic countries’ alcohol monopolies, Sweden was cheapest for wine, followed by Finland, Iceland, and then Norway.

          I don’t remember the figures for hard liquors. If you want to do the comparisons:

          alko dot fi
          systembolaget dot se
          vinmonopolet dot no
          vinbudin dot is

          (I used a different site for Finland above because it used to be the case that Alko wouldn’t list prices for anything above 22% ABV, saying it violated advertising laws.)

      2. As someone who has purchased alcohol in both Helsinki and Tallinn, and who has taken that very ferry and shopped in the FUCKING HUGE alcohol store that lives on the ferry itself, I can vouch for this. Also, it has the Finns’ awesome salmiakki liqueur that I love.

        It’s actually very common and has become a running joke to the Estonians how the Finns will literally load up cars and trucks with booze purchased on the ferry or in Estonia and take it back.

        1. Did you try any sahti? I’m curious if it’s a delicious as its name makes it seem like it must be.

          1. I’m pretty sure I didn’t, I think I’d remember that. Sounds…interesting?

    7. true story. The Costco brand of cheap vodka (actually drinkable, imagine that?) costs $14 and change out the door at any Costco in Calfornia. That exact same bottle at any Costco in Washington is $36 plus. Think I’ll buy the stuff here? Good job I have reason to drive to Californa once in a while. Bring along a very lightweight credit card when I go, and it sure is a heavy one when I leave.

    8. In Taiwan, Jack Daniel’s is that price.

  9. Why do you want to put all of those hard working smugglers out of work?

  10. Holy shit, $35 a gallon? WA is insane. Sorry, Epi & other WA H&Rers;.

    1. That’s why obesity is out of control. Everyone should drink healthful tequila, with the added benefit of vitamin C, and it’s not made with grain, so it’s paleo.

  11. Was just in Nashville yesterday on a business trip. I tend to like higher gravity, more expensive beers, but I was still freaking shocked to pay almost $15 for a plain jane imperial stout including taxes before tips. I mean, craft beer is generally expensive, but how on earth is there a such thriving craft beer industry in Tennessee with taxes that high? I was dissuaded to drink more than one beer at that price.

    1. $15? I don’t think I’ve ever seen any beer that wasn’t some extra fancy, high-alcohol thing for more than $7. But I don’t go out that much because $5 for a pint is way too much.

    2. Yeah, Tennessee has retarded alcohol taxes and regulations controlled by a liquor broker near monopoly enforced by the government. Add to that no beer sales before noon on Sunday. No wine or liquor at all on Sunday (so much for grabbing a bottle of wine to bring to Sunday dinner). No wine sold in grocery stores. Jack Daniels is made in a DRY county. And add the fact that I committed a felony last week bringing a few bottle of wine back from Portugal. Fucking. Retarded.

  12. Being an ex bar owner I have a different take on this. I think alcohol taxes are probably too low. Alcohol creates so many problems in our society, which society has to pick up the tab for. This is not a benign substance. It can be, but that is not what drives the industry. It makes its living off problem drinkers.

    Alcohol does a lot of damage. Society ends up paying for this. Somehow it should pay for itself. It might not be totally logical that a non-problem drinker ends up paying for a problem drinker, but it is better that than a teetotaler having to pay.

    1. Maybe the problem drinkers should pay for their own damage.

      1. Fair enough, but they don’t and can’t.

        What happens when a child is born with fetal alcohol syndrome? What happens when a drunk driver kills a Dad, and maims a Mom and has no insurance?

        I agree ‘alcohol’ didn’t do anything. But, as a society we end up paying for it. It seems less unfair to me for the alcohol industry to be taxed to pay back what is happening as a result of the misuse of their product. Each drinker pays a bit. This seems more fair to me than charging non-drinkers a portion of their taxes when they contribute nothing to the problem. I realize it isn’t logical to say a guy such as myself, who drinks 3 drinks a week should contribute anything, since I don’t add to the problem.

        There are other options that are perhaps more libertarian, but they are more unwieldy than a simple tax on liquor.

        1. What happens when a teetotaler isn’t paying attention while driving and hits a kid? What happens when an old person steps on the wrong pedal and drives onto a crowded restaurant patio?

          If we’re talking about fairness, I think the fair thing is to hold individuals accountable for their actions and accept that while bad things sometimes happen to the undeserving diluting the culpability of an individual across an entire populace punishes people who behave responsibly while minimizing the risk of behaving irresponsibly.

    2. Certainly your taxes are too low.

    3. Alcohol does no damage.
      Alcohol creates no problems.

      Some people who drink alcohol do damage. Some people who drink alcohol cause problems. Take away their drink, those same people will be doing damage, and causing problems…just different damages, and different problems.

      1. Some people are much less damaging without the alcohol. I can think of several examples I know personally. But whatever stupid shit they do while drunk is still 100% on them.

      2. Not my experience.

        1. Up thread you were doling out guilt, causation and responsibility across wide swaths of people. Now when it comes to “your experience” you’re suddenly interested in individualism? Neat.

          1. ? Dave said those same people would be creating problems without the alcohol. I don’t think so as it does not conform to my experience. The problem drinkers cause problems when they drink, not when they’re sober.

    4. So, because there are people who drink and make bad decisions we should reinstitute the Volstead Act? What’s your stance on banning colorful billboards that distract driving idiots? The sedentary cost “society” a great deal in terms of medical costs that get paid through taxes. Will we be taxing television now?

      1. It’s an actual real life problem that has to be dealt with. Theories don’t count in this situation. How do you deal with the fallout from alcohol and who pays for it when the drinker can’t? Because someone else ends up paying for it. The fix has been all drinkers pay a bit. Which is unfair to those drinkers who cause no problems, but somewhat more fair than having the problems paid for out of general revenues from taxes, because then non-drinkers end up paying.

        Alcohol companies make their money off problem drinkers. There would be a tiny industry if it depended upon people such as myself. As such, they have to pay. Gun companies do not make their money off bad gun owners. That is a tiny, tiny fraction of their revenues. But, take problem drinkers out of the mix and almost every alcohol manufacturer is out of business tomorrow.

        1. You’re weaving your entire argument out of whole cloth. You’re taking a very “theoretical” set of causes and effects and talking about very real punitive taxation, which, I might add, will do absolutely nothing other than deliver more revenue to the state.

    5. Why does society end up paying for it?

      1. I’m a Canadian. Up here society pays for it. But, my guess is in the US it is similar.

        Alcohol is a bad drug. IMO. It isn’t harmless, and the industry is based on people over-drinking. The industry is somewhat…somewhat…culpable. If you’re culpable, you should pay. But, how and what is fair. Tough question.

        The answer has been liquor taxation.

        You could do a private insurance company that each liquor seller or manufacturer buys into and claims for alcohol related incidents against any insured person is paid for/fought by the insurance company. But, that is litigious and just creates a whole new unproductive industry. It could be done that way.

    6. run a check and see jusst where all that hootch revenue ends up going. I can guarantee you, high stakes at long odds, little if any goes toward mitigating the problems arising from abuse of alcohol. We learned that in Washington a few years back when a citizen’s initiative did away with the insane “use” tax paid annually as a part of car registration fees, like California do. I was amazed to learn about all the “other than highway” stuff that annual registration fee supported… libraries, school meals, county health departments, city parks, and on and on that list went.

  13. I’m pretty sure this map understates the taxation. The map only shows the taxes on the sale to the consumer, there are shitloads of taxes from manufacturer to wholesaler to distributor, not to mention the inherent taxation of government-protected monopolies.

    1. Excise taxes are taken before sale to the consumer. So I think any sales tax needs to be added. Plus federal tax and any local taxes.

  14. I wonder if higher alcohol taxes actually impacts the rate of alcoholism in a state. If so, not working in Alaska.

    1. In the case of Alaska, it’s a reaction to the high rates of alcoholism, I think. But even $1 per gallon of beer isn’t so much that it would slow many people down. Everything is expensive in Alaska.

  15. I don’t think it’s Michigan’s beer tax that causes the smuggling — we’re talking about tax difference of less than a penny a can of beer between MI and IN taxes. No, the real culprit is Michigan’s $.10/can deposit (of Seinfeld fame). Which applies to soda as much as beer (and I’m guessing soda ‘smuggling’ is probably just as big a ‘problem’). The state won’t give up the deposit law (despite curbside recycling that make it no longer necessary) because…guess who gets the leftover deposit money from cans and bottles that are never returned? And if you guessed ‘retailers, to compensate them for the hassle and costs of handling of returned cans & bottles’ — try again.

  16. Looks like many states have higher beer taxes than here. Just another reason to stay put.

  17. Amazing! CA isn’t the highest-tax state!

    1. That’s amazing.

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