Let’s end discrimination in the drinks market

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Everyone has heard this basic truth many times: the amount of alcohol is the same in a 1.5 ounce shot of liquor, a 4 ounce glass of wine and a 12-ounce bottle of beer. Guzzle six shots in an hour and you’ll be drunk; slurp six glasses of wine or six bottles of beer and you’ll be equally smashed. That is common sense and indisputable math.

So why does the government treat spirits, wines and beers differently? Consider the federal tax rates for these three drinks. The Congressional Research Service notes:

When converted to standard drink measures liquor drinks are generally subjected to a federal excise tax of approximately 13 cents per 1.5 ounce shot, wine is taxed at 4 cents per 5 ounce glass, and beer is taxed at 5 cents per 12 ounce can or bottle.

Oh, and by the way, hard apple cider is treated as a wine by law, but subjected to a tax rate much lower than the excise tax on spirits, sparkling wine or your typical red or white plonk.

States, for their part, have erected whole regimes premised on the notion that beer, wine and spirits are fundamentally different products. Pennsylvania allows grocery stores to sell beer, but not wine. Florida and 15 other states prohibit beer and wine stores from selling spirits, unless they are willing to open a separate storefront or “dedicated” space. Virginia insists that only government-run shops can sell spirits. Texas allows a consumer to buy beer on a Sunday, but not liquor. States also tax beer, wine and spirits at different rates, with liquor (again) being hit with the highest excise.

Quite frankly, none of this makes sense. What possible reason can there be for discriminating among the types of alcoholic beverages? Alcohol is alcohol.

One might object, that alcohols should be taxed based their level of “proof.” If that is one’s position, then there is all the more reason to abolish the whole beer versus wine versus spirits distinction.

Taxing categories of drink is not the same as taxing alcohol content. Consider: Campari, the popular Italian liqueur, is 48 proof (24 percent alcohol by volume). Sam Adams’ Utopia beer is nearly 60 proof (30 percent ABV). Many wines are less than 10 percent ABV (like Portuguese vinho verde) and some microbrews are more boozy. A Scottish brewer produced a beer called Armageddon that is 130 proof (65 percent alcohol by volume).

The alcohol levels within the drinks categories varies vastly. Dekuyper Triple Sec liqueur, which flavors margaritas, is 30 proof (15 percent ABV); Absolut vodka is 80 proof (40 percent ABV), and George T Stagg Bourbon is more than 140 proof (70 percent ABV). Sparkling wines tend to be around 24 proof (12 percent ABV), and many red wines are 28 proof (14 percent ABV). Yet federal categorizations make bubbly winemakers pay a higher tax than “still” vintners.

All in all, both fairness and common sense argue for abolition of a regulatory regime which discriminates among beverages. Let’s tax each alcoholic beverage based on the amount of alcohol it has per ounce or gallon, and quit creating different levels of consumer access based on the type of drink.

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  • Barry Clark

    The federal tax on beer is based on the size of the brewer. A large brewer pays $18/barrel. Small brewers pay $7/barrel (for the first 60,000/year). Yet the small brewers focus on more alcoholic “craft” beers. For example, the small brewers in North Carolina successfully lobbied the state to pass “Pop the Cap,” which raised the maximum alcohol content of beer to 15%. In contrast, Anheuser-Busch’s flagship brand, Budweiser, has 5% alcohol. Many of its beers have around 4.2%. Relative to the alcohol content, a 4.2% beer from a large brewer is taxed at more than five times the rate of a 8.4% beer from a small brewer. This disparity will likely increase. Congress is expected to pass the Craft Beverage Modernization and Tax Reform Act. Using the example above on alcohol content, the relative rate will increase to more than nine.

    The federal excise tax on distilled spirits (hard alcohol) is based on the alcohol content. The tax is $13.50/“proof gallon.” The proposed Act would cut this to $2.70/proof gallon for the first 100,000/year, an 80% reduction.

    Taxes aside, the cheapest alcohol “fixes” are some vodka and gin products. For a given amount of alcohol (ethanol), they are cheaper than beer. Small liquor producers often buy almost pure alcohol from a large agricultural producer, such as Archer Daniels Midland, and dilute it with water. For gin, they also flavor it, and may further distill it. They brag endlessly about the quality of the water they add, but the artisanal part is the marketing.

    The hard alcohol excise tax is on the alcohol content. It is a larger percentage of the price of cheap booze. Small producers will maximize the competitive advantage the tax cut gives them. They will flood the market with cheap vodka and gin, made cheaper by the tax cut. Hard alcohol is price elastic; lower prices increase the amount that people buy. In other words, more alcohol consumption and the problems that come with it.

    Hard alcohol is a special problem. This has led Dartmouth College to ban hard alcohol from its campus, following the example of several other colleges. Dartmouth said, “… in the vast majority of alcohol-induced medical transports, it is hard alcohol—rather than beer or wine—that lands students on a hospital gurney.”

    In supporting the decision by Dartmouth, the president of the NASPA Foundation said that, “most of the really horrific things related to alcohol happen with hard alcohol. … It just takes too much beer to get there.”

  • Larry Pemberton

    Stopping drinking can be really tough for some but really easy for others. That is the clue as to what actions you need to take. Liquor can give individuals an expression of euphoria or the absolute pits. Some can stop cool turkey and other need support and help to ensure success. If you prefer to try on your own you then have to rise to your challenge and discover the inner strength. This can difficult especially if all around you might be drinking as the temptation can be too much.

    You can search on google for daniel python help with alcoholism to get the control technique which will help you with alcoholism

    I love all the points you have made.


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