Friday, January 18, 2008

A Reply To Pamela Bean

In case you missed it, you can read Pamela Bean's column in yesterday's Wisconsin State Journal before you read my reply. It is in reference to a bill that Representative Theresa Berceau, of the 76th district (pretty much all of Madison), proposed that would raise the tax on each twelve ounce bottle of beer by 2.4¢.

OK. You're done reading? Good, glad to have you back. Let's get the preliminaries out of the way. I find it rather shocking that Ms. Bean is "saddened" by the fact that only two legislators support a tax raise. Nobody, least of all politicians go around announcing support for a tax increase. Sure, they may vote for it when it comes up for vote. But, really, how many, if you were to stop them on the street and just ask point blank, would admit to fully supporting any tax increase? Now, taking that number, how many of those Wisconsin politicians do you think would admit to fully supporting a tax increase on beer?! After having just been raked across the coals for their support of SB 224 (The Great Dane Bill)? Yeah, I would guess not many. Of course, just because they do not admit to it, does not mean they will not vote for it.

Another preliminary, because I know you're dying to do the math in your head. 2.4¢ per bottle, is 14.4¢ per six-pack, 28.8¢ per twelve-pack, and 57.6¢ per case. Assuming only twelve ounce bottles. Most, but not all beer bottles, are twelve ounces. For example, some bottles are 22 ounces; you can about double the tax to 4.8¢ per bottle for those.

Well, with the hop price increases, the malt price increases, price increases on the bottles themselves, price increases on boxes and printing and plastic, beer prices have been going through the roof lately. One could reasonably say, enough already. And, the industry may just say this it (through its appointed lobbyists, of course). The price of a six-pack of beer has gone up considerably, and will continue to go up considerably for the near future. It is all the industry can do just to keep up with and absorb raw material prices. I understand that the tax does not affect the prices that the manufacturers pay, but the manufacturing cost increases have cut into margins so much that these price increases are being passed on to the consumer. Add another 15¢ and that just makes it another reason to buy wine (not made in Wisconsin in any significant volume, by the way) or hard liquor instead.

And that brings up another point. Why is the tax only pointed at beer? If you were to look at Ms. Berceau's handy-dandy powerpoint presentation, you'd first be inundated with a whole mess of really bad facts about alcohol. For example, did you know that:

  • We lead the nation in moderate to heavy alcohol consumption among pregnant women

  • We rank 48th worst in the nation in alcohol-related per capita health care expenses

  • In Wisconsin, alcohol and drug abuse is 4th leading cause of death, behind heart disease, cancer and stroke

  • Only Montana has more driver fatalities where the blood alcohol concentrations exceed .08

  • Wisconsin had almost 45,000 alchohol-related driving citations in 2006

  • 72% of [sexual assault] victims experienced rape while intoxicated

The list goes on. But, you will notice something about that list. None of it is specific to beer. "Alcohol and drug abuse is the 4th leading cause of death ..." In that case, it's not even alcohol alone, let alone beer, that is getting us on the list!

Well, Ms. Berceau argues, "[b]eer accounts for 81% of all alcohol that is drunk in hazardous amounts in the U.S." OK. "Wisconsin ranks 4th highest per-capita for alcohol consumption from beer." Uh huh. "The average Wisconsinite consumes 1.52 gallons of pure ethanol annually from beer." Interesting information, but I don't really see where this is going. Even her slide titled "Is the Beer Industry Innocent?" (btw, we are supposed to answer "no" to that question), not a single bullet-point applies specifically to beer (2001 expenditures for for alcohol ...)

All I'm really seeing is that people like to drink beer. And sometimes people do stupid things when they drink alcohol. A lot of people in Wisconsin do stupid things. So, because those stupid things increase state costs, we should tax only people that drink beer? Why don't we only tax stupid people? That seems a far better plan and gets right to heart of making those responsible pay for their actions.

Or maybe, it is like the lottery. Where we make the poor, who buy a disproportionate amount of the lottery tickets, pay for an education system that fails them. Except in this case, we can make the poor, who pay a disprortionate amount of their income for beer (as opposed to hard liquor and wine), pay for the health system that won't admit them.

We should, according to Ms. Berceau, raise the tax on a barrel of beer from $2.00 per barrel, to $10.00 per barrel. A five-fold increase! And this goes directly to the heart of my favorite slide, titled "What does this mean for the heavy drinker?"

  • Under the Current State Beer Tax: If you drink a six-pack a day by the end of the week you will have paid $.25 in state tax

  • Under Rep. Berceau’s Proposal: If you drink a six-pack a day by the end of the week it will cost you an additional $1

But here's what really gets me: she's intellectual dishonest about the whole thing. Near the end of her power-point she sets up some straw men ("Arguments against increasing the Wisconsin beer tax."). For example, Argument 1 is what I alluded to earlier: it is a regressive tax. Her response is "all of our taxes are regressive taxes." Fair enough. But then she asserts: "to the extent that family expenditures rather than family income better reflect lifetime income, expenditures on alcohol are progressive." What that means is that as we earn more, a greater percentage of our income is spent on alcohol. "Alcohol." Not "beer." Please, let's keep this focused. It makes sense that as we earn more, we can now afford to buy luxuries like vodka, gin, and wine. When we are poor, all we can afford is beer! Her second strawman is that "Beer is a blue collar drink ..." now pay attention to the second part of this sentence "... the beer tax hits average working people of modest means hardest because they drink the most beer." Sounds like what we just said earlier doesn't it? Except it's not. The argument is not that the poor, or "those of modest means" if you will, drink more beer - it is that the beer they drink is a greater percentage of their income. Not only that, but "alcohol" expenditures for "those of modest means" cut into money that is otherwise paid for necessities like heat, groceries, gas, and other bills. For everyone else, it merely cuts into discretionary income that would otherwise go to movies. Of course, Ms. Berceau's response: "Beer consumption is approximately evenly split across upper and lower income levels." Thanks. That helps. It goes on like this for a while.

At the end of the day, do I have a problem with a tax that will hardly affect any of us monetarily? Not really. But what I have a problem with is singling out beer, and the drinkers of beer, as those to be burdened by this tax. Why not single out wine? Or vodka? Or, really, all alcohol? Heck, why not legalize drugs and tax those so that drug addicts can pay for their own treatment? Ok, that's another argument for another forum on another day.

So, this doesn't really end up as a "reply" to Pamela Bean. Except that she is apparently "for" Ms. Berceau's bill. And, I can't say that as a publication we are endorsing a policy "against" Ms. Berceau's bill. All we are saying is that it isn't fair that beer is singled out, and the arguments being used in favor of this bill may not be entirely honest. But, it's politics, what else is new?


  1. Is it me or is odd that someone who works for Biomark writes a piece advocating taxes be increased to pay for "biomarkers"?

  2. Kent,

    Good point. I kind of got carried away analyzing the powerpoint and never really got back on the subject of refuting the opinion piece. But, good catch and yet another reason why we should be skeptical of Ms. Bean's interests.



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