Excise taxes on beer are among the most regressive taxes today, as they place the greatest burden on lower and middle income consumers. In fact, 52 percent of all beer is bought by families with incomes of $45,000 or less. Additionally, taxes comprise the most expensive ingredient in beer—around 44 percent of the total price. In fact, according to an analysis by Americans for Tax Reform, other consumer goods such as bread and tires are taxed a rate of 31 and 36 percent, respectively.
Excise taxes on beer also have a serious impact on jobs and economic development in areas where brewing is an important industry. Estimates by the Beer Institute suggest that the doubling of the federal excise tax on beer in 1991 cost nearly 60,000 jobs in the brewing, wholesaling and retailing industries.
Some argue that raising beer excise taxes will curb alcohol abuse. While excise taxes drive down product sales, increases in excise taxes don’t produce the desired effect on curbing abuse. Those who abuse alcohol are rarely affected by price increases. Others suggest that we should raise excise taxes because higher excise taxes will help lower illegal underage drinking. While most teens don’t drink, those who do usually obtain alcohol from their parents, legal drinking age relatives, friends, or strangers, or at retail through the use of false IDs or poor verification checks. Price is usually not a factor in their ability to obtain alcohol.