Economics is by no means my forte; however, common sense is. Common sense, when applied to economics, is often disregarded as a kill joy, for common sense states items and services come at an expense and that one cannot spend more than they make whether at the individual, corporate, or governmental level.
Lofty proposals for health care reform require lofty funding, evident in a historically high federal budget. Unlike a business budget, which is balanced before being board approved, a federal budget declares a monetary figure for running the country, and then concerns itself with finding the funds. Concerning health care reform, which is an initial attempt to not only cut health care costs, but to provide government sponsored health care for all, the figure is in and now the unwilling benefactor is being sought. One such civil Santa Claus under scrutiny is our beloved beer industry.
Six days ago the Committee for Financing Comprehensive Health care Reform, met to fill the gaping hole in the health care budget. A few members of the committee made the plausible suggestion of increasing the excise tax on beer by 300%. An excise tax is a tax levied on a service or product. Excise taxes, when raised at the macro level (300%) can be extremely pernicious, not only to an industry, but to the ation it supports. Here is the logic.
An excise tax does not sound excessive at the surface level. It imposes a tax on a good, such as beer. Sounds fair, right? Keep in mind that the business is also being taxed (i.e. the brewery) and the brewer. As an individual contemplating a future in the brewing industry, does the potential for triple taxation encourage, or discourage me? Were such a 300% levy approved, the only way a brewery could survive is by drastically increasing the cost of their product, resulting in reduced consumption, resulting in the eventual disintegration of a business.
According to an expert in the beer industry, Jay Brooks:
Directly and indirectly, the beer industry employs approximately 1.9 million Americans, paying them almost $62 billion in wages and benefits and generating more than $198 billion in economic output. Proposals to triple or quadruple the excise tax will have severe economic impacts on the industry. Just tripling the current beer tax to $20.25/proof gallon will cost the country jobs at a time when the national unemployment rate is the highest it has been since 1983. Beer Institute estimates that a 300% increase in the excise tax on beer will result in 179,000 lost jobs, $5.9 billion in lost wages, $18.9 billion in lost economic output, and $2.7 billion in lost federal, state, and local revenues from decreased production and consumption. The impacts of these tax increases may be even greater for small businesses as microbreweries and brewpubs will be hit with significantly larger tax bills. Many of these smaller companies may be forced to close.
Exaggeration is not necessary…the stakes are high!
Perhaps you and I could swallow a more modest and moral levy on our favorite liquid oblation–say, 15%–but 300% is intolerable and reeks of desperation. I hope that any respect and admiration for the brewers that make your evenings that much more enjoyable invokes civil action on your part. Hundreds of years ago, recourse to unethical fiscal confiscation was limited to throwing boxes of tea into a bay. Fortunately for us, action is at the tips of our fingers. All you have to do is email a member of the Finance Committee!
Jay Brooks, to whom I am indebted to for so much information regarding this topic, has provided numerous links to easily facilitate activism. Please visit his sites: