Bourbon and your state taxes

[DBM]

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?

[portwood]

$20.07/$27.03 ** this is the price on a shelf tag **

$27.01/$35.40 ** this is the price we pay **

[theglobalguy]

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.

[SqueakScolari]

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.

[Flyfish]

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.

[smknjoe]

Sales tax in TX is 8.25% and that's all we pay on liquor. I always quote the shelf price which does not include taxes.

[callmeox]

Carpe diem is seize the day.

Caveat emptor is what you were looking for.

I haven't had a chance to look up the Ohio price before local taxes on the state list, but I will when I have a few so that we can compare.

[Flyfish]

Carpe diem is seize the day.

Caveat emptor is what you were looking for.

.

Are you sure? I heard a waiter say that carpe diem also means the fish of the day. Either way, de gustibus non disputatum est--even if it tastes fishy. If I eat too much catfish with hushpuppies, that's Gallia omnis est in partes tres divisa--all of my gall bladder is divided in three parts.

[jtexaslonestar]

Are you sure? I heard a waiter say that carpe diem also means the fish of the day. Either way, de gustibus non disputatum est--even if it tastes fishy. If I eat too much catfish with hushpuppies, that's Gallia omnis est in partes tres divisa--all of my gall bladder is divided in three parts.

Nice recovery, blame the fish.

[393foureyedfox]

Are you sure? I heard a waiter say that carpe diem also means the fish of the day.

nice save!...........

[Harry in WashDC]

Virginia is a control state, and its retail prices are online at www.abc.virginia.gov/Pricelist/price.html while Washington DC has an ABC Control Board overseeing licensed private stores. I quote prices paid before tax.

Va's is about 4.3% while DC's is about 6%. In late 2013 WDC increased its off-premises spirits tax to 10%. Makers in DC (like Green Hat Gin)and wholesalers bringing spirits into DC pay $1.50 per gallon. See http://otr.cfo.dc.gov/node/232962 for more detailed info.

Va ABC price for a 750ml of MM is $29.99 while stores in DC offer it, before specials or discounts, at $30.99 to $32.99 depending on the neighborhood.

Edited January 26, 2014 by Harry in WashDC
more detailed info

[P&MLiquorsEric]

I can tell you those retailer markups in Washington are quite high compared to other states.

It is also tough to get an across the board cost from distiller to distributor. Shipping and volume will vary greatly.

In KY, retail liquor/wine markups are between 10% (sale items) and 40% (rural liquor stores with little competition). We average slightly over 25% markup (20% margins) including all beer, liquor, wine and NA mixers/soda/bar items.

[fishnbowljoe]

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. :skep: FWIW, I'm pretty sure that the political climate here in Illinois has nothing to do with it at all. :slappin:

[P&MLiquorsEric]

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. :skep: FWIW, I'm pretty sure that the political climate here in Illinois has nothing to do with it at all. :slappin:

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.

[DBM]

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?

[mbroo5880i]

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

[sutton]

$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.

[P&MLiquorsEric]

With big box stores, it Is tricky. They might pay a certain price per case when they buy it. But beam/makers might pay them "rent" to keep a large display at all times. That might be a 30, 50 or even a 100 case display. Beam reps will stock, rotate it seasonally etc.