The public health problem buried in the Senate GOP’s tax bill

A Brookings report warns the Senate tax bill could exacerbate an existing public health problem

(CREDIT: AP Photo/Petr David Josek)
(CREDIT: AP Photo/Petr David Josek)

Alcohol is linked to more deaths than guns or opioids. Between 2006–2010, excessive alcohol use resulted in 88,000 deaths per year. For comparison, drug overdoses killed about 64,000 people in 2016 — and we’ve declared the opioid crisis a public health emergency.

As alcohol-linked deaths continue to rise, the Senate is expected to vote on a tax bill this week that would exacerbate this public health problem. Tucked away in the Senate’s tax bill is the “Craft Beverage Modernization” provision, which would cut federal excise taxes on alcohol producers, particularly small brewers. A recent Brookings Institution report estimates that this legislation would “result in between 281 and 659 additional motor vehicle fatalities… (relative to a baseline of 37,461 deaths [in 2016]) and 1,550 additional alcohol-related deaths” per year.

The Senate bill would make several changes to taxes on beer, liquor, and wine that account for this dramatic increase. The changes would last up to 2019 and are subject to renewal:

  • It reduces the beer tax from $7 to $3.50 per barrel on first 60,000 barrels and $18 to $16 per barrel on the first six million barrels.
  • The bill changes the liquor tax rate from a fixed to tier system. It lowers the current liquor tax rate from $13.50 to $2.70 per proof gallon on the first 100,000 proof gallons. Taxes increase to $13.34 on the next 22.1 million gallons. Anything above that is taxed at the current rate of $13.50.
  • Extends wine tax credits to all domestic wineries whereas it is currently limited to small producers; the tax credit ranges between $0.54 to $1.00 per gallon.

How could these tax cuts result in loss of life? To produce this estimate, Brookings Senior Fellow Adam Looney reviewed empirical evidence of the most recent changes in state and federal alcohol tax law, which unequivocally concluded that alcohol excise taxes are an effective way to reduce alcohol-related deaths.

“Doubling of the tax would reduce alcohol-related mortality by an average of 35 percent and traffic crash deaths by 11 percent,” wrote Looney. Looney is citing a study that analyzed 50 publications, which also concluded alcohol taxes reduce sexually transmitted disease by 6 percent, violence by 2 percent, and crime by 1.4 percent. “Hence, a 16 percent reduction would lead to roughly 659 traffic deaths based on the 37,614 total traffic deaths in 2016 and about 1,550 alcohol-related deaths based on the 88,000 alcohol related deaths per year according to the NIH.”

The current alcohol tax rates were initially increased by 6 percent by the federal government in 1991. There is a plethora of research that shows alcohol taxes improves the quality of or saves lives, and public health experts have largely been encouraging lawmakers to increase taxes not lower them.

A 2013 study published in the American Journal of Preventive Medicine found that the 1991 federal tax reduced deaths by 4.5 percent or by 6,480 deaths. The authors said this was a “conservative” estimate. The reason is because higher taxes reduces consumption of alcohol — which in-turn reduces mortality.

Why should “responsible” drinkers pay the price? A recent study hypothesized a 25 cent-per drink tax increase and found that higher-risk drinkers paid about 5 times more in annual taxes compared to lower-risk drinkers. In fact, lower-risk drinkers paid less than $30 dollars in taxes annually. The public health perk for $30 a year was an 11 percent reduction in heavy drinking.

The “Craft Beverage Modernization” provision was offered as an amendment earlier this month by Senator Rob Portman (R-OH). When ThinkProgress reached out for comment, Sen. Portman’s Communications Director Kevin Smith recalled the senator’s comments during a committee markup.

“This bill now gives the smaller companies much needed excise tax relief that will allow these entrepreneurs to reinvest even more in their businesses and into our communities,” said Portman. “Ohio is number four in the country in craft beer production. We like that. The industry now supports about 15,000 jobs, 61 new breweries have opened just last year alone in Ohio. This legislation is only going to promote the expansion and the jobs that come with these entrepreneurial small businesses.” Smith did not respond to ThinkProgress’ inquiry  about the public health implications of the tax bill.

Sen. Portman offered the amendment based on Sen. Ron Wyden (D-OR)’s bill “Craft Beverage Modernization and Tax Reform Act”. Although Wyden is against the Senate tax bill, a spokesperson for his office defended the tax provision; Oregon ranks third nationwide in alcohol-related deaths. “While alcohol misuse and addiction is always a health concern, Senator Wyden’s legislation focuses on revamping antiquated regulations that unfairly punish small craft beverage companies that are growing America’s economy,” the spokesperson told ThinkProgress. Sen. Wyden has also previously argued his bill would create “new jobs and economic opportunity.”

Alcohol lobbyists spent nearly $23 million in Congress this year. Sens. Portman and Wyden are among the top 20 members to receive the most money from these lobbyists. The Joint Committee on Taxation says the tax would save alcohol producers $4.2 billion.