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  1. #1
    Enthusiast
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    Bourbon and your state taxes

    It's not uncommon for the price of a bottle to be used as a qualifier to why a bourbon or other whisky is considered different or better (value) than another, and it's commonly used as the primary reason why otherwise good or great bourbon is passed up on store shelves.

    I'm curious if we recognize how wide the retail price gap is between the same bottle of bourbon that shows up in Texas, Virginia or California due to alcohol or other "sin" taxes on distilled spirits.

    Let's start by using a standard, commonly available bottle as an example; Maker's Mark, which is distributed nationwide almost exclusively by Southern as far as I can tell. It's not uncommon for a producer and distributor to have what amounts to be a national contract price (though it's technically illegal) so let's assume a 750ml bottle of MM is purchased by every state distributor for $10.

    I am only familiar with my state, Washington, so I will show what a bottle of $10 product arriving into the state ends up costing at retail. Be prepared for four state taxes/fees in addition to the commercial markups.

    The distributor pays a 10% state license fee on all product they purchase.
    $10.00 becomes
    $11.00

    The distributor marks up their product 20% to 40%.
    $11.00 becomes
    $13.20/$15.40

    The retailer pays a 17% state liquor control board license fee on all product they purchase.
    $13.20/$15.40 becomes
    $15.44/$18.02

    The retailer marks up their product 30% to 50%.
    $15.44/$18.02 becomes
    $20.07/$27.03 ** this is the price on a shelf tag **

    The consumer pays a 20.5% state sales tax.
    $20.07/$27.03 becomes
    $24.18/$32.57

    The consumer pays a state liter tax of $3.77 per liter ($2.83 on a 750ml).
    $24.18/$32.57 becomes
    $27.01/$35.40 ** this is the price we pay **

    These are quite accurate totals based on prices I see around town for the lowest cost (big box beverage or Costco) to the highest (small independent liquor store). It gets pretty outrageous with higher priced products too. One of my favorite small stores offered me a bottle of PHC 7th at their best non-gouging price, but it was still $155 out the door.

    Anyone else care to share how your state would tax that same bottle of MM?

  2. #2
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    Re: Bourbon and your state taxes

    Quote Originally Posted by DBM View Post
    $20.07/$27.03 ** this is the price on a shelf tag **

    $27.01/$35.40 ** this is the price we pay **
    That is a big jump from price tag to actual cost. Each time prices are mentioned throughout SB I always wonder if people are quoting the former or latter?
    (Here in Ontario, the state monopoly includes all the taxes on the shelf price tag.)
    "Old guys tend to say it like it is." squire

  3. #3
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    Jun 2012
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    Louisville, ky
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    Re: Bourbon and your state taxes

    Quote Originally Posted by portwood View Post
    That is a big jump from price tag to actual cost. Each time prices are mentioned throughout SB I always wonder if people are quoting the former or latter?
    (Here in Ontario, the state monopoly includes all the taxes on the shelf price tag.)
    Washington state is an extreme example of spirits tax from sticker to final price. I assumed most states bury everything except traditional sales tax in what is shown on the shelf.

  4. #4
    Advanced Taster
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    Aug 2013
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    South Jersey/PHL
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    125

    Re: Bourbon and your state taxes

    I always quote the shelf sticker price. Sales tax here is 7%. It's a couple bucks on a typical bottle. If our tax was 20%, I'd think about the price a lot differently and probably quote the OTD price.

  5. #5
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    Illinois
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    4,392

    Re: Bourbon and your state taxes

    Selection here in Illinois is pretty decent overall. Taxes are another matter. We have the obligatory 8.25 % state sales tax. Some areas of the state have other taxes too. Where I live, there's also a local 1% tax on alcoholic beverages on top of the state sales tax. Other places have a county tax on top of the state sales tax, while yet even other places have a county tax AND, a local tax on top of the state sales tax. FWIW, I'm pretty sure that the political climate here in Illinois has nothing to do with it at all.
    " I never met a Weller I didn't like"

  6. #6

    Re: Bourbon and your state taxes

    Quote Originally Posted by fishnbowljoe View Post
    Selection here in Illinois is pretty decent overall. Taxes are another matter. We have the obligatory 8.25 % state sales tax. Some areas of the state have other taxes too. Where I live, there's also a local 1% tax on alcoholic beverages on top of the state sales tax. Other places have a county tax on top of the state sales tax, while yet even other places have a county tax AND, a local tax on top of the state sales tax. FWIW, I'm pretty sure that the political climate here in Illinois has nothing to do with it at all.
    I grew up in Illinois. In the state Capitol of all places. All those taxes yet Illinois is in terrible shape fiscally. Im surprised marijuana hasn't been floated as an answer.

    We have a 6% sales tax here in KY and our city has a 5% tax. Total of 11%.

    3 years ago, Kentucky had no sales tax on alcohol since it was so heavily taxed on the wholesale level.

    Jimmy Russell led the protests at the state Capitol building when they enacted the sales tax on booze. A great quote from him when interviewed on a local news: the damn Hoosiers will be able to buy Kentucky bourbon for less than a Kentuckian.

  7. #7
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    Re: Bourbon and your state taxes

    I guess I was wondering if anyone has paid attention to the taxes "behind the shelf tag". For example, when Washington was a control state the state LCB was more than happy to tell you that, after purchasing spirits from the distributor, they collected 51.5% in various taxes (from the distributor and the consumer) and were included in the OTD shelf tag price.

    I imagine that most states have a series of alcohol taxes that are collected before it gets to a store where you "only" pay typical state/city sales tax.

    And yes Washington is outrageous, but if other states weren't somewhat close, we'd see a 750ml Maker's Mark for $35 in one state and $15 in another. Could it be that producers, distributors and retailers are able to increase margins in the lower taxed states like Wyoming with the effect to normalize consumer prices?

  8. #8
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    May 2013
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    Indiana
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    Re: Bourbon and your state taxes

    In Indiana, the excise tax rate is $2.68 per gallon for spirits (>21% alcohol). Sales tax is paid on the shelf price.

    The following website shows a comparison of excise tax rates by state. Of course, excise tax is just one of several different types of taxes that can be applied to alcohol.

    http://www.taxadmin.org/fta/rate/liquor.pdf

  9. #9
    Virtuoso
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    Apr 2011
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    Re: Bourbon and your state taxes

    $24.99 for a 750ml of Maker's around here last I checked. Don't know how it gets there from wholesale but I believe our sales tax on alcohol for off-premises consumption (no restaurant) was repealed a couple of years ago if the alcohol were already subject to an excise tax when coming into the state (I guess I should be paying closer attention to my sales receipt). I'm unfamiliar with what those excise tax rates are or who pays (wholesaler, distributor, retailer, or all three).

    As a side note, I also noticed that at the big box stores, Maker's comes in maybe twice a year. An assumption on my part, since the display starts out as a monsterously huge thing with 750mls and handles galore stacked halfway to the ceiling. As the year goes on this gets lower and smaller to the point where it is only on the shelf and then it grows again. I don't know whether this is a reflection of buying in bulk to get further discounting or how the product is shipped into the distribution chain from the distillery. But the next time it "grows" it will be interesting to see what the shelf price is. At smaller local retailers, the bottle is $1 to $2 higher.
    Mark

  10. #10
    Connoisseur
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    Apr 2011
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    Toledo, OH
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    784

    Re: Bourbon and your state taxes

    Ohio is a control state where the taxes are buried in the shelf price--which is the OTD price. I have been burned a few times in other states when what looked like a really good price was negated by taxes added at the check out counter. Carpe diem--which is Latin for buyer beware.
    If God made anything better than bourbon he must have kept it for Hisself.

 

 

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