10 Not-So-Fun Beer Tax Facts

It’s April 15th; tax day. I thought it might be cool to research some beer tax facts and share them with you but truth be told, now that I have – I kind of wish that I hadn’t.

Below are nine pretty crappy things I learned – along with one positive fact:

Beer Tax

1. Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined

2. If all the taxes levied on the production, distribution and retailing of beer are added up, they amount to more than 40% of the retail price

3. When you factor in sales and excise taxes, state and federal income taxes, payroll taxes, and all of the other taxes imposed on beer – the tax burden is nearly 70% higher than it is for the average purchase made in the U.S.

4. An analysis by the Beer Institute found that households earning less than $50,000 per year pay half of all beer taxes, while accounting for less than one-fourth of all income earned in the U.S.

5. Beer taxes are actually 6.5 times higher as a percent of income for lower-income households (those earning less than $20,000 per year) compared to higher-income households (earning $70,000+ per year) making the tax on beer one of the most discriminatory of all taxes in the federal and states’ tax codes

6. First, the excise tax on beer is levied, by law, at the brewery and becomes an indistinguishable part of the product cost as it moves through the distribution system – like other costs, it is marked up by wholesalers and again by retailers – it is also included in the price used to compute state and local sales taxes, thus causing consumers to pay a tax on a tax – as a result, beer drinkers actually end up paying about $2.00 out-of-pocket for each $1.00 of tax levied by government

7. The U.S. Beer industry directly employs more than 1,043,000 people in brewing, wholesaling, and retailing and the industry contributes more than 1.8 million jobs to the U.S. economy (*bright spot*)

8. In 1991, federal government doubled the beer tax from $9.00 to $18.00 per barrel, at that time the largest single increase in the federal beer tax in American history – as a result, it is estimated that some 60,000 hardworking Americans lost their jobs

9. Hiking a state’s beer tax can cause some consumers to buy their beer in a neighboring state, shifting the tax collections and business activity across state borders – often, the loss is even worse, as other goods and services are purchased on these trips

10. Some government agencies and advocacy organizations suggest that regardless of their negative impacts on consumers and the American
economy, beer taxes should be raised even higher in order to pay for the problems caused by abusive drinkers, claiming that individuals who abuse alcohol create a “social cost” and that all beer drinkers should pay society back for these costs in the form of higher taxes

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