THE MOST EXPENSIVE INGREDIENT IN BEER

12 comments

Posted on 17th April 2014 by Administrator in Economy

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The most expensive ingredient in your beer is TAXES. Your beloved Federal, State and local governments siphon off $31.9 billion of taxes from your keg every year. Taxes account for 40% of the retail price of a bottle of beer. When people buy beer, the tax burden is 70% higher than for the average purchase in the U.S. This is a disgrace. Why do these government drones extract so much from the purchase of a beverage? The taxes certainly aren’t being used to fill potholes, as the roads are atrocious and dangerous well into Spring. These taxes are extracted to fund the high salaries and gold plated pensions of government drones. I’m going to discuss this issue in depth this weekend when I visit the Shamrock in Wildwood.

I’ll ask these government drones why beer taxes are so high. I’m sure it will end well.

 

Map: Beer Excise Tax Rates by State, 2014

Tax treatment of beer varies widely across the U.S., ranging from a low of $0.02 per gallon in Wyoming to a high of $1.17 per gallon in Tennessee. Check out today’s map below to see where your state lies on the beer tax spectrum.

There isn’t much consistency on how state and local governments tax beer. This rate can include fixed-rate per volume taxes; wholesale taxes that are usually a percentage of the value of the product; distributor taxes (usually structured as license fees but are usually a percentage of revenues); retail taxes, in which retailers owe an extra percentage of revenues; case or bottle fees (which can vary based on size of container); and additional sales taxes (note that this measure does not include general sales tax, only those in excess of the general rate).

The Beer Institute points out that “taxes are the single most expensive ingredient in beer, costing more than labor and raw materials combined.” They cite an economic analysis that found “if all the taxes levied on the production, distribution, and retailing of beer are added up, they amount to more than 40% of the retail price” (note that this may include general sales tax and federal beer taxes, which are not included in the estimates displayed on the map). Last year, we did a podcast with Lester Jones, Chief Economist at the Beer Institute on tax treatment of beer, which is worth a listen.

For more info on alcohol taxes, see here. For a look at how taxation of beer works in each state, see this handy table from the Federation of Tax Administrators.

12 Comments
  1. Bostonbob says:

    That can’t be right, Massachusetts is #44 at 11 cents. Please don’t let this get back to our legislators or the price of my Natty Daddy’s are sure to rise. I might have to switch to Steel Reserve.
    Bob.

    17th April 2014 at 11:32 am

  2. IRB says:

    Time for Counter-revolution!
    One reason’s as good as another at this point.

    17th April 2014 at 11:32 am

  3. TPC says:

    #50, looks like MO can do something right once in awhile.

    17th April 2014 at 11:49 am

  4. AWD says:

    Don’t have kids

    17th April 2014 at 12:02 pm

  5. AWD says:

    Admin and Boston Bob

    Buy as much beer as you can, or better yet, steal as much beer and you, and pour it into the harbor, like the Boston Tea Party. This exercise will both show your defiance, and destroy your manhood.

    H.jpg

    17th April 2014 at 12:05 pm

  6. Hope@ZeroKelvin says:

    Brew. Your. Own.

    17th April 2014 at 1:14 pm

  7. Stucky says:

    Where 80% of beer goes …
    1

    17th April 2014 at 2:47 pm

  8. IndenturedServant says:

    Brew your own beer. I’ve been brewing since 1991. I used to be able to brew beer for about 1/2 the price of store bought beer but over the last 15 years or so prices of ingredients have gone nuts. I still prefer brewing my own and will be cooking off a 10 gallon batch this weekend. The worst aspect to brewing your own is bottling. Cleaning all the bottles each time and the process itself gets old quick. To get around that I built myself a kegerator that holds 8 five gallon corny kegs (1/6 barrel) and as long as I keep the beer cold and under CO2 pressure it lasts forever. I’ve found that it actually improves with age.

    For anyone interested, look for a company called Northern Brewer out of Roseville, MN for your ingredients. As far as equipment goes I advise everyone to buy used. There is enough used brewing equipment out there to last for eternity.

    Do a little reading online about the basics of brewing. It really is simple. As the homebrewers bible says: “Worry less, brew more.” The three most important things to remember are: 1. Keep everything clean. I’ve never had a batch go bad in 23 years and even if you have a batch go bad, it won’t kill you. 2. Your brew kettle WILL boil over the minute you take your eye off of it. You do NOT want to be cleaning a stove that suffered a wort boil over. Trust me on that! Get yourself a pot that holds 4-5 gallons and avoid aluminum. 3. DO NOT over prime your bottles. Follow the instructions/recipe exactly otherwise you will have beer bottle grenades going off.

    17th April 2014 at 5:47 pm

  9. Marc says:

    “These taxes are extracted to fund high salaries and gold plated pensions of government drones.”

    General welfare and higher compensation for the growing ranks of unionized tax feeders have almost become one and the same. Whatever the level of current taxation, there will always be an insatiable hunger for more. California, Illinois, and the Ultimate Mafia in Washington are good examples of that.

    17th April 2014 at 10:54 pm

  10. El ILEGAL says:

    Fuck. Just don’t drink. Drugs are a waste of time you could be using to read a novel. Fucking people at work can’t read one sentence without taking a break.

    My old boss said, I’m surrounded by Buckwheats.

    17th April 2014 at 10:55 pm

  11. Tony says:

    What really pisses me off is they charge sales tax on the tax. Isn’t that one of the reasons this country was founded?

    18th April 2014 at 1:39 pm

  12. Mike Moskos says:

    Or just make it yourself. You save not only on the various sales taxes, but also on payroll taxes by not working to buy beer (work to get taxed to buy other things).

    19th April 2014 at 1:41 am

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