With craft brewers across the country and liquor interests in Mitch McConnell’s Kentucky cheering and campaign-contributing, Congress just voted to keep alcohol taxes low and unindexed. Low alcohol taxes cost revenue, and hurt public health. But special interests, now euphemized as “stakeholders,” call the shots in our government. So alcohol taxes are too low.
In 2009, I took up marijuana tax policy, because I figured that legalization without taxation was implausible – and that legalization was going to happen.
Out of the corner of my eye during that marijuana work I noticed that alcohol was undertaxed in America. Today’s non-indexed tax of $13.50 per proof gallon has far from kept up with inflation. Since the early 1990s, that nominal rate has lost about 60 percent of its real impact.
Working on RAND’s Insights for Vermont let me know that I’m not the only one thinking that “the total social cost associated with alcohol abuse is very much larger than all costs and outcomes related directly to marijuana use.” And exposed me to the idea that “even a 10-percent reduction in alcohol abuse accompanying the doubling in marijuana use could be a net win for society.”
I got out of the international tax business long ago on the theory that multinationals called the shots politically, and would continue to dodge taxes, as indeed they have. Monied interests, from liquor to high-tech companies, don’t pay tax. So we are borrowing what we need. Lots of experts say decifits don’t matter. Fingers crossed!