Republicans want to cut taxes. And in the latest bill introduced in the House, they’ve dug up all sorts of sources of revenue to pay for it — from eliminating deductions for moving expenses to repealing the adoption tax credit to ending the mortgage interest deduction.
But here’s one source of revenue Republicans didn’t take up but should: the alcohol tax.
Lawmakers have not increased the federal excise tax on alcohol, which is separate from state alcohol taxes, since 1991. (It was increased somewhat regularly before that.) This has left the tax in a pretty bad state: As the Congressional Budget Office (CBO) noted in 2016, “current excise tax rates on alcohol are far lower than historical levels when adjusted to include the effects of inflation.” This, obviously, depletes the federal government of potential revenue.
But it also has another effect: It makes drinking cheaper. And that, the research has shown time and time again, makes people more likely to drink — even if it leads to big problems.
This gets to the other argument for raising the alcohol tax: It would be good for public health and safety. Alcohol is linked to 88,000 deaths each year in the US — more than all drug overdoses, guns, or car crashes. A higher tax could help reduce that death toll.
“The great opportunity we have is to restore taxes to the real value that they had a few decades ago,” Philip Cook, a public policy expert at Duke University who wrote Paying the Tab: The Costs and Benefits of Alcohol Control, previously told me. “That’s justified by the current social costs of drinking, and would have all kinds of beneficial effects, while being justified just from the point of view that drinkers should pay for the damage that they do.”
This is the opportunity Congress has. Not only would an alcohol tax increase help raise revenue that Republicans desperately want, but it would be a huge boon in many other ways.
How Congress could raise the alcohol tax
The CBO routinely releases a report called “Options for Reducing the Deficit.” As part of this, it analyzes the possibility of raising the federal government’s alcohol excise tax — by increasing the taxes on all alcoholic beverages to $16 per proof gallon.
In the 2016 report, the CBO looked at what would happen if the excise tax were raised to $16 per proof gallon for all alcoholic beverages, along with the elimination of tax credits for small producers and exemptions for personal use. It found that this would raise $70.4 billion over 10 years.
How? First, it would help level the tax between different kinds of alcoholic beverages. As the CBO explained, “the alcohol content of beer and wine is taxed at a much lower rate than the alcohol content of distilled spirits in part because the taxes are determined on the basis of different liquid measures.” This leads to big disparities:
A $16 per proof gallon tax for all alcoholic beverages, along with the elimination of related tax credits and exemptions, would level the playing field.
It would also increase the alcohol tax across the board, the CBO found: “Under this option, the federal excise tax on a 750-milliliter bottle (commonly referred to as a fifth) of distilled spirits would rise from about $2.14 to $2.54. The tax on a six-pack of beer at 4.5 percent alcohol by volume would jump from about 33 cents to 81 cents, and the tax on a 750-milliliter bottle of wine with 13 percent alcohol by volume would increase from about 21 cents to 82 cents.”
This is just one idea for raising the alcohol tax. Some experts would like to see the tax raised by more or less. But since the CBO has actually reviewed this proposal, it offers a useful starting point: $70.4 billion over 10 years.
An increase would present huge gains for public health and safety
Obviously, this means your alcohol will cost more — 40 cents for a fifth of distilled spirits, nearly 50 cents for a six-pack of beer, and more than 60 cents for a typical bottle of wine.
“What the hell, man?” you might be thinking. “Why do you want the government all over my booze?”
The simple answer: It would save lives.
Raising the alcohol tax would increase the price of alcohol, which would make drinking more expensive, which would make people less likely to drink. And if people are drinking less, fewer people are getting drunk and doing the kinds of dumb things you do while drunk. That includes not just drunk driving but other alcohol-related problems like crime — 40 percent of violent crimes in the US involve alcohol in some way — and risky sex.
“It’s a disinhibition theory,” Charles Branas, a researcher at Columbia University, previously told me. “So it’s not so much aggressiveness, but that decisions and judgment that would normally be held in check are suddenly disinhibited under consumption of alcohol.”
One question with this is, well, does it work? Sure, you can increase the tax and make alcohol cost more. But does that actually get people to drink less?
The research shows a higher alcohol tax not only gets people to drink less, but has a particular impact on excessive drinking and its negative outcomes.
The Task Force on Community Preventive Services in 2010 reviewed the research on alcohol’s “price elasticity,” how much consumption changes with price. The results were clear: “Nearly all studies, including those with different study designs, found that there was an inverse relationship between the tax or price of alcohol and indices of excessive drinking or alcohol-related health outcomes. Among studies restricted to underage populations, most found that increased taxes were also signifıcantly associated with reduced consumption and alcohol-related harms.”
This chart shows the findings, with each number representing the percentage effect on excess consumption for every 1 percent increase in the price of alcohol:
In short, higher alcohol prices really do reduce alcohol-related problems, including heavy drinking and underage consumption.
Other research backs this up. David Roodman, a senior adviser for the Open Philanthropy Project, has conducted really thorough, impressive reviews of the research, from the effects of incarceration on crime to the domestic economic impacts of immigration. He also in 2015 took a look at the research on the alcohol tax. His findings were incredible (emphasis mine):
To put it another way, paying about 50 cents more for a six-pack of Bud Light would probably save thousands of lives every single year.
This is a conservative estimate. It only counts deaths from alcohol-caused diseases. The number of saved lives would be higher if it accounted for alcohol-related deaths due to violence, car crashes, and other problems.
And yes, a higher alcohol tax would have an effect in those other areas as well. A 2010 review of the research in the American Journal of Public Health, for example, concluded, “Our results suggest that doubling the alcohol tax would reduce alcohol-related mortality by an average of 35%, traffic crash deaths by 11%, sexually transmitted disease by 6%, violence by 2%, and crime by 1.4%.”
A common counterargument is that a higher alcohol tax could lead to job losses, since the alcohol industry may be forced to fire workers or hire fewer people to make up for the profits lost as people cut back on their drinking. But studies and researchers have found that the revenue from the tax and the spending shift from alcohol to non-alcohol products can lead to, on net, more jobs.
By simply raising the alcohol tax, then, America could save lives, combat crime, and slow the spread of sexually transmitted diseases. That does mean you’ll have to pay a bit more at the checkout line next time you buy your favorite chardonnay, or maybe you’ll have to pass on the chardonnay altogether — but the research suggests it’d be worth the cost.