Deaths linked to alcohol are significantly more common than drug overdose deaths, but lawmakers may promote more drinking through a two-year tax break for producers of beer, wine and spirits as part of the Senate’s tax code overhaul.
The tax break, for 2018 and 2019, would save alcohol producers $4.2 billion, according to the Joint Committee on Taxation. The provisions in the Senate Finance Committee’s tax plan were requested by Republican Sen. Rob Portman of Ohio, but are based on a bill from Sen. Ron Wyden of Oregon, the committee’s top Democrat.
Supporters of the tax break emphasize its benefits for small brewers, whom they tout as job creators. But public health experts who study the link between taxes and alcohol consumption think the economic impacts are overstated, especially since the underlying idea is for people to buy more alcohol.
Portman touted the job growth potential during the Finance markup last week.
“The industry now supports about 15,000 jobs. Sixty-one new breweries have opened just last year alone in Ohio,” Portman said. “This legislation is only going to promote the expansion and the jobs that come with these entrepreneurial small businesses.”
But all alcohol producers — including giant brewers, wineries and distilleries — would benefit from the changes. The Beer Institute, which lobbies on behalf of all brewers, estimates that it would save the beer industry $130 million a year. Large brewers like Anheuser-Busch InBev, the global conglomerate that makes Budweiser and produces more than 100 million barrels of beer in the United States, would get a modest tax break, around $12 million.
Smaller brewers would get a steeper cut for the first 60,000 barrels they produce. A brewery that makes 10,000 barrels a year would save about $35,000 annually. The Brewers Association, which represents the smaller producers, thinks that these relatively minuscule amounts would go a long way for their members.
“All of those breweries would take that savings and reinvest in their physical plant,” Bob Pease, the Brewers Association’s president, said in an email. “That reinvestment would allow those breweries to make more beer. When small and independent breweries produce more beer, they create more jobs and hire more workers.”
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But public health experts cited potential harm from greater alcohol use and cast doubt on the economic effects.
“If the purpose of the bill is to generate more jobs, more economic activity, the only way that’s going to happen is if they generate more business,” said David H. Jernigan, a professor at the Johns Hopkins Bloomberg School of Public Health.
The tax changes would come as per capita alcohol consumption is climbing after dramatic decreases in the 1990s, which followed record consumption rates in the preceding decades. On average, every American age 14 and over consumed the equivalent of 2.32 gallons of ethanol in 2015. That’s 258 beers, 104 glasses of wine and 168 shots per person in a year.
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There has not been extensive research into how a tax cut could impact consumption. But Philip J. Cook, a Duke University professor of public policy, has examined the result of the original 1991 excise tax that the industry is now seeking to reduce.
“What we know is that a higher tax reduces drinking. That’s perfectly clear compared to what it would be otherwise,” he said. “With reduced drinking comes reduced mortality both due to drunkenness and to chronic alcoholism.”
In a 2012 study, Cook and a colleague argued that the 1991 tax saved more than 6,000 lives in the first year it was imposed. Another 2012 study found that a
hypothetical tax increase would mostly have the greatest economic effect on the heaviest drinkers, and would result in an 11.4 percent reduction in heavy drinking and a 9.2 percent reduction in drinking overall.
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Originally Posted by Ron Paul
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