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Would a higher beer tax cut crime?

A professor argues that raising the tax on beer would reduce both consumption and crime. But powerful lobbies make that move unlikely.

By Teresa Mears Feb 4, 2011 6:21PM

This post is by Janet Novack of Forbes. on MSN Money
Would raising the tax on beer reduce the number of young folks who get caught up in crime and the high budget and social costs of  locking up so many people?


In a provocative article, "The Economist’s Guide to Crime Busting," in the new issue of The Wilson Quarterly, Duke University’s Philip J. Cook and the University of Chicago’s Jens Ludwig suggest that it would. (The article is here, but isn’t free.)


The profs argue that crime policy (from an economist’s point of view) should focus "both on making criminal opportunities less tempting and the law-abiding life more rewarding" and offer three strategies which they say have been shown to do just that: raising the mandatory age through which kids must attend school; creating business improvement districts with private security guards (a tactic Los Angeles has used with great success); and yes, raising taxes on alcohol.


"It’s obvious," they write "that in considering criminal opportunities, such as whether to break a beer bottle over the head of the obnoxious Yankees fan on the next bar stool, people often make foolish, impulsive choices. There are many reasons for that -- hormones, immaturity, stress -- but surely one of the most important is intoxication."


The average state excise tax on beer, they note, is now only about 10 cents per 12-ounce bottle. Raising it to 55 cents they write, would persuade some teenagers "not to pick up that second six-pack on Thursday night" and would produce such extra benefits such  as "fewer auto accidents and more money for state treasuries." Data from Cook’s 2007 book, Paying The Tab, suggests a 55-cent-per-bottle levy would reduce beer consumption perhaps 10% and crime maybe 6%, they note.


"It’s not just beer,"’ Cook said in an interview.  "We should also be interested in raising the liquor tax. Wine may be off the hook, since it’s not connected to crime." (That’s because wine, in the U.S. anyway, is a small part of total alcohol consumption and is imbibed mostly by old fogies, who don’t drive up the crime rate.)


Cook notes he’s made "something of a career writing about the beer tax" and that his arguments have "fallen mostly on deaf ears." Congress hasn’t raised alcohol taxes in 20 years and over the last half century taxes on alcohol, when adjusted for inflation, have fallen sharply.


Even more remarkable, while cash-strapped states have been desperately  looking for sin taxes to raise (and new types of sin to tax), they’ve mostly steered clear of alcohol. According to the Tax Foundation, 18 states raised tobacco taxes in 2009 and another seven boosted them in 2010.


Alcohol? Only five states raised those levies in 2009 and in 2010 none did. But Massachusetts voters did approve a November 2010 ballot initiative, pushed by the Massachusetts Package Stores Association, eliminating the sales tax on alcohol sold in stores, effective Jan. 1, 2011. Massachusetts legislators had extended the sales tax to alcohol in 2009, the same year they raised the sales tax rate from 5% to 6.25%. Without the added sales tax, Massachusetts’ tax on beer is just 11 cents per gallon, compared to a 55 cents per gallon tax on wine and $4.05 per gallon tax on hard liquor.


It’s not just Massachusetts where beer enjoys a tax edge.  For example, Maryland -- a Blue state that has rarely met a tax it wouldn’t raise -- imposes a 9-cent-per-gallon tax on beer, compared with 40 cents a gallon on wine,  and hasn’t raised either  tax since 1972, despite lobbying efforts by a coalition of health and social services advocates.


What accounts for such low beer taxes? Cook notes the political dynamics of beer are somewhat different than those in the current fight over taxing sugary drinks, in which national groups have taken the lead. For example, in Washington State last year, the American Beverage Association, (currently chaired by a PepsiCo executive) spent $16.5 million on a successful ballot initiative to repeal the state’s new temporary, 2 cents per 12 ounces tax on soda and other sugary beverages. The Massachusetts fight, by contrast was funded largely by local package stores , distributors and organizations with the Beer Distributors of Massachusetts kicking in $300,000 of the $2.8 million raised.


"The beer distributors are a powerful political force in a lot of states. It’s not Anheuser-Busch,"’ says Cook.


More from Forbes and MSN Money:


Feb 5, 2011 6:25PM
If I agreed with the rest of the article, the big choking point would be "raising more revenue for states".  Talk about giving booze to an alcoholic!  Government should receive no more money until they learn to spend it responsibly.  Most state and local governments are as bad with money as the Feds/US Congress are.  The voters need to cut these PIGS off the trough before the bondholders do.
Feb 7, 2011 6:11PM
I got a better idea.  Let's find out what the Proffessor really likes and tax the hell out of it instead.
Feb 7, 2011 8:19PM
It's pretty funny that these two professors who should be so intelligent are really so stupid. Crime is not "caused by" drugs, alcohol or sex. Crime is due to low intelligence combined with a crappy economy. When people who are not the sharpest knives in the drawer can't find work that pays the bills, they turn to crime. When lazy ghetto rats can't get welfare, they turn to crime. Crime is a symptom, not the disease. The disease is ignorance.
Feb 5, 2011 3:35PM
How very sad that this is his life's work?  Yet he's never heard of Prohibition.  Reduce crime? gave rise to organized crime and deaths due to poor quality bootleg liquors.  Those are great goals to devote your life to!  He's like a Doctor who's never heard of blood.  Eye-rolling
Feb 5, 2011 12:54PM

Right...let's pretend it's not because we want the money, it's because we care about you so much.  Prohibition was a failure but hey, at least those folks were being straightforward.  If governments gave a crap they wouldn't be bankrolling their projects off this decadent lifestyle (/sarcasm).


Besides, the young and broke are already buying the cheapest swill there is. 

Feb 7, 2011 5:59PM
what is it with these know-it-alls that think more taxes are the answer to everything? get your hands off our money and out of our lives. BEER ME!!!!!
Feb 7, 2011 5:50PM

"Teenagers will not pick up that second six pack on a Thursday night"? Uh, it's already illegal for teens to drink.


 Enforce the laws already on the books.


A higher tax would do NOTHING unless it was so exorbitantly high that NO ONE could afford beer; then bootlegging, here we come!




Maybe a slightly higher tax that could be put towards education would be a good idea, but we all know what happens when the money gets shifted into another state coffer (see: lotteries).

Feb 7, 2011 5:25PM
Why not set up a police state with the government controlling everything. This will reduce crime even further.
Feb 7, 2011 5:36PM

1.  Put a $5000 per year tax on anyone calling themselves an "ECONOMIST".

2.  Make all "ECONOMISTS" do actual work for a living every other year.

3.   End Tenure for all "ECONOMISTS".


Problem solved on 99% of all ECONOMIC theories and postulates.

Feb 7, 2011 8:33PM
Taking drink out of the mouths of American's is crazy. This is a nation that celebrates drinking and getting drunk and stupid. Witness all the beer commercials on the Super Bowl and all the happiness at the thought of drunken parties. And for those of you who can't find jobs, lower your standards. I bet I could find a job in your town. Maybe not the one you want but they are there.
Feb 7, 2011 8:09PM
Its simple economics people. When the price of one good becomes too high people will find substitutes. If they cant afford beer they will use wine, hard liquor, weed, or other illegal drugs. People will always want to change their state of mind and if they cant do it with beer they will do it with something else. Taxing beer will not solve anything.
Feb 7, 2011 8:05PM
Gee, I think these "professors" have forgotten what happened under prohibition which generated bootlegging and other crimes and let's NOT forget that it was high taxes on whiskey that put a lot of moonshiners into business, remember the great "Whiskey Rebellion".
People will be brewing their own and some will do it in a quantity that they can sell without the high taxes and it will all breed another group of gangs and thugs.
Some stupid educated people NEVER learn.
Feb 7, 2011 7:20PM
If the government needs money perhaps they should not spend x millions of dollars a day on wars that the US has no business fighting in the first place.
Feb 7, 2011 9:12PM
Oh ya, cause beer drinkers are going crazy and committing crimes everywhere. What... this is nonsense. I don't see the connection between drinking beer and being a criminal. What percentage of criminal activity is attributed to beer? C'mon. Most beer drinkers are mellow types just sipping a few. In fact, I'm enjoying a cold one right now.
Feb 7, 2011 8:48PM
Consider the source--economics professors. As professional economists, they predicted the current depression, right? No. As professional economists, they can make intelligent suggestions on international trade, right? Apparently not. Instead, they venture into law and criminal justice--fields they have no training and experience in--to make their proposal. Of course.

Also, note that they would not tax wine. Wine is for the self-anointed intelligentsia. Beer is consumed by commoners. They just want to control the "riff-raff". In other words, the professors sound like old-style "limousine liberals".

If you accept their "logic", you must also conclude that Prohibition worked and the "war on drugs" has been a shining success.  Of course, none of those things have happened. But, still, some groups and individuals will still propose the same old, tired nonsense, and believe that _this_ time, it will work.

Feb 7, 2011 7:26PM
sure tax the only thing left for the poor man , won't cut back any crimes , just make money for the goverment..... and or states you know they will follow suit  and add more what a bunch of JERKS./.....
Feb 8, 2011 10:57AM
Let me understand this? A higher tax on beer would reduce teens drinking beer. First of all, a higher tax never reduced anything a teen will buy. Secondly, it is illegal for a teen to buy beer. If they do get someone else to buy it for them, they are probably paying a higher fee anyway. I never understood how a higher tax reduces buying a product and produces extra money to fund other programs.  
Feb 7, 2011 7:28PM

A heavy tax on beer would have little effect on the crime rate, but it could lead to more attempted shoplifting in stores which sell beer.  You might see obesity rates drop slightly as heavy beer drinkers switch to something else. College kids would not be happy, but they would still buy it. The home brewing business would explode. 


As Randy stated, prohibition does not work for things people really want.  It didn't work for booze back in the 1920s, but it did make the mafia a very wealthy enterprise.  The so-called war on drugs isn't working, in spite of spending billions of dollars each year to fight it.  States used to outlaw gambling, but they figured out how much revenue the lottery and casinos would add to the coffers, and now more states have some form of gambling than those which don't.


A beer tax would not change my personal consumption at all.  I doubt if I drink more than 3 or 4 beers per week, and they are all microbrews, and price is not an issue. 

Feb 7, 2011 6:36PM
Why not tax everything more?  Doing this will eliminate more jobs and crime will increase to levels never seen before in the history of this country.  When are people going to wake up and realize that higher taxes on anything will hurt this fragile economy.  Higher taxes on fuel, higher taxes on food, higher taxes on beer and cigarettes, give me a friggin break....
Feb 7, 2011 4:13PM

If they want to increase tax revenue and decrease crime…legalize it! And, Yes, I totally agree about the prohibition posts…prohibition only INCREASED organized crime and gave people like the Kennedys the income as rum runners to buy their political power. Raise the price of beer and increase the amount of hard alcohol being consumed. More bang for the buck right?  Nothing quite like Tequila to help sober people up and I am sure Mexico would love the extra the cartel does now...Sad

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