Policymakers in federal, state, and local governments across the country have proposed increasing alcohol taxes to close budget deficits, fund construction projects, and pay for health care. Yet these governments already collect more than a third of the shelf price of alcohol comes in direct excise and sales taxes. This means that the government earns $2 for every $1 earned by producers, wholesalers, and retailers!
These proposals continue to crop up despite the fact that numerous economic studies have shown that increasing the already hefty tax load on alcohol sales will result in lost jobs. When the beer tax doubled in 1991, approximately 60,000 Americans lost their jobs. In that same year, an increase in the excise tax on liquor resulted in a decrease in federal alcohol tax revenue for the following five years and the elimination of 98,000 jobs. Consequently, states were forced to shell out $151 million in unemployment benefits—just one of the unintended consequences of tax increases.
Did you know?
Many states propose alcohol taxes as a way to raise revenue for the state’s general fund. Here are some of the most outlandish and wasteful ways states and the federal government spend their tax revenue:
- $9.4 million federal grant to Search for Extra Terrestrial Intelligence Institute (SETI) in California to search for Aliens.
- $367,000 misspent federal funds on inflatable alligator and under-the-sea waterslides in Texas.
- $42 million to mail postcards to all taxpayers to inform them their federal stimulus checks would be arriving soon.
- $424,000 to put photographs and information about insects online.