Alcohol taxes are too low, have not kept up with inflation

Alcohol taxes are too low, have not kept up with inflation

State alcohol excise taxes are typically only a few cents per drink and have not kept pace with inflation, according to a new study in the January issue of the Journal of Studies on Alcohol and Drugs. Raising those taxes, according to the authors, represents an opportunity for states to increase revenues while simultaneously improving public health outcomes and costs related to excessive alcohol consumption.

Although excise taxes are the most common type of tax levied in alcohol sales, used by all 50 states for beer and by most states for wine and spirits, they are not well understood. The formula is a bit counterintuitive, based on a fixed cost per unit volume (for example, $18 for a barrel of beer, regardless of the brand or cost of the beer). Because the tax is not easy to understand (how much is a barrel of beer?), in the current study researchers calculated tax amounts in relation to standard drink sizes in the United States. They found that, across states, the average excise tax is 3 cents for a 12 ounce beer, 3 cents for a 5 ounce glass of wine, and 5 cents for a typical shot of liquor.

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