What Shall We Cheers To? Alcohol Taxes!

Here's an interesting study from the Center for Budget and Policy Priorities that takes an interesting look at an issue I've been grappling with: the sin tax. For a while, I wasn't for the sin tax so much as I was against arguments against the sin tax, but after reading this, I'm tempted to sin tax my most regular sin more than ever.



The study looks at inflation's erosion of the alcohol tax over the last sixty years. Alcohol taxes are pegged to volume, rather than inflation, and so since 1991 they've fallen by 37 percent. Take a look at the withering of the alcohol tax in the last half century.

The authors of this study aren't suggesting that today's Americans pay to party like it's 1951, but they do say that we stop allowing alcohol taxes to shrink through inflation, and at least bring alcohol taxes back down to their 1991 levels. Would alcohol taxes lead to a more perfect union? I don't know. Will they lead to lower health care costs? It's extremely unlikely. But they will they help pay back the deficit? Yes they will help. Let's look at the findings.

Simply returning alcohol taxes to their 1991 levels would raise about $27 billion in the next ten years. What would be the personal pain? The study says: "A person who drinks a glass of wine every night would pay only $10.95 more in alcohol excise taxes over the course of a year."

For the big money, you tax alcohol at its 1991 level, adjusted for inflation, and index the rate or the next ten years. With that tax -- for which you would have to pay about 13 cents more for a bottle of beer -- we could raise about $101 billion over those ten years. That's not going to kill the deficit beast, but it's better than paper cuts and not too painful for the boozing public. Thirteen cents for a few miles on the road to fiscal responsibility? I can drink to that.