Holiday Tax Advice From Epidemiologists
Ernie Neve, CPA
December 19, 2018
Holiday season is in full swing, and millions of Americans are celebrating with their favorite libations. Breweries are rolling out their winter brews. Wine stores are stocking up on champagne. And somewhere in a gentrifying warehouse district near you, a hipster bartender in a flannel shirt and man bun is crafting his favorite seasonal cocktail.
But alcohol can be a mixed blessing. Alcoholism is a disease; public intoxication is a crime; and drunk driving is epidemic. Yes, that's what an epidemiologist does- studies epidemics.
If a plucky Silicon Valley startup invented a new product called "Booz" or "Hüch," the Food and Drug Administration would surely shoot it down.
So, could taxes play a role in helping Americans drink more responsibly? Last week, Vox analyzed the issue from a public health perspective, and came to some pretty sobering conclusions. (No lawyers and lobbyists spinning loopholes here!)
First, some perspective. Uncle Sam collected about $9.7 billion in alcohol taxes in 2017. These generally run $16 per barrel of beer (with a special rate for your friendly neighborhood brewpub), $1.07-3.40 per gallon of wine, and $13.50 per "proof gallon" of hard liquor. State governments add their own taxes, ranging from 2 cents/gallon of beer in Wyoming to $35.22/gallon of the hard stuff in Washington.
Epidemiologists have concluded that boosting those taxes by 10% — about 50 cents for a six-pack of Bud Light — would cut deaths from alcohol-related diseases by 2,000-6,000 per year. Raising taxes would also cut deaths from car crashes, violence, crime, and STDs. Professor Mark Kleiman of New York University says, "The single most effective thing you can to reduce crime right away is to raise the price of alcohol." It wouldn't even mean hiring new cops or building new prisons.
What about the argument that raising alcohol taxes punishes responsible drinkers? The American Journal of Preventative Medicine reports that "higher-risk drinkers would pay nearly 83% of an effective tax increase of 25 cents per drink." And responsible drinkers would benefit from reducing the crime, drunk driving, and health problems they're already paying for without a higher tax.
Of course, raising taxes requires political will — a quality that seems to be in short supply in Washington. 63% of Americans drink. Licensed beverage establishments employ millions of Americans. It's hard to see Congress shunning beverage lobbyists just to satisfy a bunch of lab rats.
There's one way to avoid booze taxes entirely, and that's to just quit drinking. Rolling Stones guitarist Keith Richards, who turned 75 this week but appears likely to live until the sun explodes, just announced that he's given it up. Richards has a long history of enjoying controlled substances, so the alcohol he consumed faced a crowded pharmaceutical environment anyway. But now he's down to just coffee and cigarettes. (Of course, with the pickling effect gone, will everyday diseases of aging realize Richards's body is a safe space for them now?) What's the world coming to?
We wish you and your family all the best this holiday season. So enjoy your favorite adult beverage in moderation. Because what's the point of calling us to cut your taxes if you aren't around to enjoy the savings? Please do not forget to check out my blog at www.nevegroup.com. There are many valuable year end tax planning tips you can still implement!