Federal Excise Taxes

[cowdery]

I'm probably preaching to the choir here, but the federal excise taxes on liquor and tobacco have always been pet peeves of mine.

I do not know if an additional tax on beverage alcohol products is part of any health care plan now before Congress, or whether Bush is likely to recommend one. Clinton mentioned such an increase in interviews, and increasingly health care costs are the justification for higher beverage alcohol taxes.

You would think the beverage alcohol industry would universally and unconditionally oppose excise tax increases as a matter of principle but, in fact, the industry often splits on this issue. Wine makers try to distance themselves from brewers and distillers -- particularly distillers -- in an effort to carve out an exemption for themselves using the familiar but specious "wine is food" argument.

The argument in favor of "unhealthy products" taxes is simple and superficially attractive. Tobacco and alcohol are unhealthy, therefore their use increases health care costs. Higher taxes are justified to help pay for health care expenses caused by these products and borne by government programs such as Medicare and Medicaid. In this way, tobacco and alcohol users pay for the consequences of that use, much as drivers pay for highway maintenance through gasoline taxes.

Higher taxes also cause prices to go up, thus discouraging consumption and reducing the associated health care costs.

The logic of taxing "unhealthy" tobacco and alcohol products to pay for health care is wrongheaded for two reasons. First, both product categories are already taxed outrageously. The current Federal Excise Tax (FET) on spirits adds more than $2.50 to the price of a 750 ml bottle of 80 proof whiskey. Here in Chicago, that's 30% of the retail price for a popular brand like Jim Beam, Ten High or Early Times, before the addition of local taxes. Second, singling out tobacco and beverage alcohol products suggests that they are the only legal products with adverse health consequences, which is far from the case.

For example, doesn't the logic of an "unhealthy products tax" suggest there should be massive new taxes on handguns? Like federal cigarette and beverage alcohol taxes, it would be levied on manufacturers and thereby become part of the price each time the piece changes hands, even extra-legally. The argument would be that handgun sales impact both law enforcement and health care. The Second Amendment does not say that the right of the people to bear arms shall not be taxed.

In the health care arena, how about massive new federal taxes on the beef, pork and dairy industries, for example? Their products are high in saturated fat, which causes heart disease, still the leading killer in the U.S. It is estimated that one million Americans a year die prematurely as a result of consuming too much fat and cholesterol.

We have to eat, you argue, while we don't need to drink or smoke. Okay, fair enough, but we don't need to eat ice cream to sustain life, and ice cream is just about the most concentrated source of saturated fat you can find. Why not add a federal "health care" tax to Ben & Jerry's, Baskin Robbins and other frozen desserts? Alcohol taxes are based on proof, they'll probably base the ice cream tax on percentage of butterfat.

In theory, it should work the same way: tax unhealthy foods (i.e., foods that are high in saturated fat) to make them more expensive, so people will eat them less often, thereby being forced to eat healthy foods (grains, vegetables, legumes, etc.) more often, thus becoming healthier and using less health care.

In addition to ice cream, let's tax McDonald's, Dominos Pizza, etc. Why not all tax fat grams? Any food that contains saturated fat will be taxed so much for each gram of fat in the final, packaged product. As with alcohol, the tax will be considered as owed when the product is manufactured, not when it is sold. That means all promotional samples and goods that have to be sharply discounted for some reason will still be taxed the same amount as goods sold for full price.

How about coffee? Necessary for life? Unhealthy? How about soft drinks? They have no positive nutritional value but contribute to health care problems ranging from tooth decay to morbid obesity?

I am not advocating such taxes, of course. I am simply saying that if we are going to tax "unhealthy" products to pay for health care, then let's tax all "unhealthy" products equally. Why is it appropriate to single out tobacco and alcohol?


--Chuck Cowdery

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You left out probably one of the most insideous factors concerning these unhealthful products... the threat to innocent citizens. Just the other evening, my wife and I were in a restaurant where an adult couple were consuming an alcoholic beverage WITHIN JUST A FEW FEET OF A MINOR CHILD! And only two tables down sat three young ladies, one of whom was obviously pregnant. Scientific studies have shown (or could easily be funded to show) that alcohol fumes from an open glass are detectible (by precision instruments) throughout the entire enclosed area. How can people be allowed to possess open alcoholic beverages, spewing forth their poisons into the same air as a pregnant mother? Why, if adding another 45% or so of taxation would put the price out of the reach of JUST ONE DRINKER, it would be worth whatever it took to accomplish it, don't you think?

=John=
http://w3.one.net/~jeffelle/whiskey

[**DONOTDELETE**]

Two GREAT posts. Chuck, your argument makes perfect logical sense. You 2 gentleman missed an AWESOME show on Sat. evening on ABC (I think) called, "Mr. Stossel go to Washington" It was a John Stossel report on how how the government has its nose everywhere it dosent belong and screws up 95% of what it touches. He claimed on average every American must work untill the end of March or May (I don't remember which) of every year just to pay his taxes. ALL of the money earned untill then goes for taxes!

There is nothing wrong with taxes. It's how they are wasted that irks me. And to have some products like alc. and tobacco taxed so much that when you buy them most of your purchase price goes to big brother is absurd.

Remember, it's not just the F.E.T. and sales tax to consider. If I pay 10 bucks for a bottle of J. Beam, and say $4 goes to the manufacturer, of that 4 bucks he pays a little of it to his employees who made the bottle of whiskey and what he pays them gets taxed several times. Then, every time they buy something with that little sliver of money that was orriginally mine, they pay a sales tax. Also, whatever profit the manufacter might make gets taxed. Then, when that company pays out the profit from my 4 bucks they recieved, in the form of dividends, a tax on that profit is paid by the stockholder. And also, with what is left, when ever the stockholder actually tries to use that money, he again is TAXED (sales tax)! The same can be said of the distributer, the trucking company who brought it to my city, the retailer, and so on!!

So of that $10 I paid, which was left over from the income taxes I ALREADY paid, almost all of it goes to Uncle Sam!


On a lighter note, I'm new here, so hi.

Chris
aka Hunter7612

[**DONOTDELETE**]

Your sarcastic lampooning of the liberal mindset & agenda is well taken John. You show exactly just how vacant their arguments are.

Linn Spencer

Have Shotglass. Will Travel.

[**DONOTDELETE**]

Amen Brother Cowdery!

Firearms and ammunition are also highly taxed by the Feds. Unlike alcohol and tobbacco the second amendment has a friend in the N.R.A. Now over four million strong the N.R.A. is ; very vocal, politically motivated, well funded by it's members, and need I say well armed. Nothing upsets a liberal like four million well armed conservatives. It is a great joy to behold.

Linn Spencer

Have Shotglass. Will Travel.

[**DONOTDELETE**]

Please allow me to butt in here and say "Welcome to Bourbonia" Chris! This ought to be a hot topic as the issue here reaches far beyond mere taxation.

Linn Spencer

Have Shotglass. Will Travel.

[**DONOTDELETE**]

Chuck,
Don't forget the state and local taxes on the product. I have seen graphs but together showing that the cost in taxes for a #$10.00 bottle of whiskey is as much as 70% or $7.00. Kentucky's congressmen usually oppose taxe hikes so the answer is to have you loyal bourbon drinkers in other states contact your tax happy congressmen and tell them that you oppose an increase on taxes for distilled spirits. I say it is time to put a tax on soft drinks if they really need more money.
Mike Veach

[MashBill]

John,
I know you're joking and I see the humor in it, but there are people that really think this way. That's not so funny is it?

Just think what could be done if these liberals devoted their efforts to something really worthwhile.... America would be without equal.


Bill
http://home.kc.rr.com/mashbill/

[MashBill]

Amen Brother Linn!
That's why I'm a Life Member of the NRA.

Bill
http://home.kc.rr.com/mashbill/

[MashBill]

Chris,
Welcome aboard! If you like bourbon, rye, or Tennessee whiskey then you have come to the right place!

Now as a result of your post, I need to grab another drink just to calm down.... (Insert gulping sound here.) Eagle Rare do your stuff. Ah! That's much better.

I just figured my Federal Income Tax tonight. I had to work from January to March 13th just to pay my "fair share" to the government. What did I get in return? You tell me......

Bill
http://home.kc.rr.com/mashbill/