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.