The Case for Booze Taxes



Harold Pollack observes that in public health terms our most serious drug problem by a wide margin is the perfectly legal drug known as alcohol. The good news about alcohol is that whereas cigarette smoking is really bad for you from puff number one, moderate alcohol consumption is genuinely fine. But problem drinking is behind a lot of social ills—not just the famous drunk driving, but developmental disabilities in children, liver damage, violence, etc. And to an enormous extent, the harms caused by excessive drinking are imposed not just on the drinker but on other people, making the case for using taxes to moderate consumption clearer than in the cigarette case.

But Pollack observes that while cigarette taxes have been going up, the reverse is the case with booze: “Over the past 50 years, Cook reports, the inflation-adjusted value of federal liquor taxes declined by a factor of six while the inflation-adjusted value of federal beer taxes declined by a factor of 3.6.” When the time comes to start paying down the massive national debt we’ll be facing, there’s a very strong case that reversing this trend should be part of the picture: “Cook argues that a 10-cent tax per ounce of ethanol (the amount contained in two drinks) would reduce ethanol sales by 12 percent and would reduce motor vehicle fatalities by about 7 percent. An estimated 80 percent of these taxes would be paid by the 13 percent of American adults who are heavy drinkers.”

As with cigarette taxes, you wouldn’t want alcohol taxes to go too high, lest it spawn serious black market issues and associated criminal activity. But a more modest, yet substantial, tax could provide us with some revenue and do an enormous amount to build a safer, healthier country.