Surprise! The Herald is for Question 1, which would repeal the sales tax on alcoholic beverages. Its principal argument appears to be that alcoholic beverages are already taxed via the alcohol excise, and it would be wrong to “double tax.”
Massachusetts consumers have always paid one tax on beer, wine and liquor purchased in a package store. Yes, it was assessed at the wholesaler level but it was baked into the shelf price and felt at the register.
Now those same consumers pay two taxes on that same bottle of wine or case of beer….
So Question 1 on November’s ballot really boils down to whether voters believe it’s fair to pay a tax on top of a tax – at a time when unemployment is high and small businesses are struggling.
It isn’t…. Question 1 is as much about fairness – about the principle of double-taxation – as it is the effect on shopping habits.
That might not be a terrible argument, if the amount of double taxation that’s actually happening were significant. But it’s not.
The excise tax, as of now, is 55¢/gallon of wine, or about 11 cents per standard (750 ml) bottle; and $3.30/barrel of 31 gallons or beer, or 6 cents per 6-pack of standard (12 oz.) bottles.
So how much “double-taxation” are we actually paying? Well, the sales tax is 6.25%, so to get the amount of “double tax,” you multiply the excise by 0.0625. Results: for wine, less than 0.7¢ per bottle. For beer, less than 0.4¢ per six-pack. In other words, in both cases, less than a penny of “double tax” – and that’s the case even if the wine or beer is quite expensive, since the excise is assessed only by volume.
Now, I’m generally not one to trivialize how much people spend on taxes. But the fact is that in this case, with respect to the amount of “double taxation” we pay on beer and wine under the current system, we are talking about truly trivial amounts of money. Even on stronger liquors, which are subject to a higher excise ($4.05/gallon) than beer and wine, a typical 750 ml bottle will have a “double taxation” component of about a nickel.
If you want to argue against Question 1 on the ground that alcohol should, on the merits, be exempt from the sales tax, great – knock yourself out. Let’s have that debate. But don’t give me this “double taxation” shibboleth. It sounds scary, until you look at the numbers. Then you realize that it’s just silly.
The premise is we’re taxing a tax. This double taxation, despite however insignificant you think the dollars are, is a detriment to our fellow citizens who run package stores near our states borders. We do not need to be making it harder for businesses to function in this state by making their merchandise cost far more than it does just a couple miles away in New Hampshire.
The problem for the package stores near the border is emphatically not the double taxation. The problem, if there is one, is the sales tax itself. We could solve the “double taxation” problem by repealing the excise tax, right? No more double taxation. But we’d still have the issue of 6.25% being added to the price of alcohol near the border, and the package stores would still be unhappy.
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p>Like I said, argue about the sales tax on its merits, if you want. But don’t pretend that “double taxation” is the issue. It’s not.
It’s the feeling that our leaders don’t care if they “tax the tax.” It’s arrogant. It’s more “can I have another, sir!” It’s insult added to injury. Where’s it stop?
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p>THAT’S the issue.
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p>If I have two jobs, one at a wealthy hedge fund that pays me in excess of 1 million per annum and the other at Home Depot at minimum wage, I do not have a double salary.
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p>If I run you over with my car, and then run you over with my skateboard… I have run you over twice, but I have not inflicted the same damage in each instance.
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p>When I go to a bar and order a double martini, the bartender puts twice the amount of gin.
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p>There are transactions and there are quantities. The quantities have to be equal in both transactions to fulfill the definition of the word ‘double’.
The Herald wants the citizens of the Commonwealth to subsidize alcohol purchases by giving booze a special tax break relative to everything else subject to the excise tax.
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p>Why should paperback books be taxed, for example, but alcohol, by contrast, given a massive relative tax break and freed from the excise tax.
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p>Fairness is indeed the issue. Sellers and purchasers of alcohol should take responsibility for the costs their actions impose on society and pay their fair share. Even with one normal tax plus one tiny tax, the costs of alcohol to everyone far exceed the tax revenues generated.
just curious, but why can’t they just increase the excise tax instead?
The problem is that since the excise tax is per-gallon, it doesn’t vary as the product gets more expensive. So, as I have argued before,
If that’s the case, wouldn’t a better solution be to move the whole alcohol tax to a higher sales tax and do away with the excise tax?
What’s inherently wrong with taxing alcohol in a hybrid system, both (a) per content since cheap booze results in all the same social problems as expensive booze, and (b) as a percentage, so it’s not so regressive?
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p>As a side note, I’m surprised the Herald didn’t proclaim a treble tax due to the bottle deposit on beer cans and bottles.
because of 2 reasons:
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p>1. we start losing the framing debate when we have to go back and point out how it’s technically taxed twice and not really double taxation which just comes across as splitting hairs.
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p>2. as has been pointed out, making it a % makes it lose the regressive structure and it loses out on a lot of potential revenue when when the flat tax part remains.
… does the $250 bottle of wine impose more “societal costs” than the $10 bottle? Frankly as a guy who buys the $10 bottle of beer I’d rather be charged on volume, and think that it would be more fair if I were.
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p>To the extent the excise tax is regressive, it is not a good example of a regressive tax. No one has to buy alcohol.
I have heard that most states subject alcohol to both an excise tax and a sales tax (except, obviously, states that don’t have a sales tax). Does anyone know if this is true?
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p>If so, then I would agree that exempting it from the sales tax simply to gain NH sales is a foolish decision — because then why wouldn’t you apply that logic to everything that has a sales tax?
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p>I did find it interesting that the excise tax is a per-gallon tax — I wonder what the rationale for it is? It also seems to be a fixed amount — Massachusetts is 55 cents per gallon of wine, 11 cents per gallon of beer, and $4.05 per gallon of spirits. I wonder what the rationale is for 3 different rates.
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p>Leaving the excise tax aside, I don’t see a reason to exempt alcohol from the state sales tax. The sales tax taxes all sales except for items that are deemed “necessary” such as food and clothing. Alcohol is not a “necessary” item. Case closed for me.
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p>Beyond the sales tax, I can see value in adding additional taxation to alcohol. It does cause problems which our state must treat. Countless court cases. Death by accident. Jail space. Patrolling for people who are driving drunk. Yes, the problems are caused by a small subset of alcohol users, but it wouldn’t be practical to assign the entire cost of the impact of reckless use of alcohol to those who use it recklessly — imagine getting a $25,000 ticket for drunk driving, or if you get drunk and take a swing at someone, a $10,000 fine to support the cost of alcohol-related problems?
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p>In fact, I think that such a zero-tolerance system would cause more damage to the package store industry than a 6.25% sales tax. Plus, MA package stores already enjoy limited competition due to the “you can only own 2 package stores” law.
and I’d love to see the lege take a crack at them too…
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p>That’s not quite right. Periodicals aren’t sales taxed, nor are comic books. Gasoline isn’t sales taxed. American flags aren’t sales taxed.
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p>Those are four additional sales tax exemptions I’d like to see eliminated, as they too aren’t necessary in the same sense that food, clothing, prescription drugs, and diapers are necessary. On the flip side, I think that non-prescription drugs (FDA approved or whatev) should be tax free. I’m talking about Robitussin, not those lame-o Airborne “created by a teacher” nonsense pills.
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p>It’s true, this stuff is “on the margins” with respect to total revenue, but it’s also a matter of creating a fair tax code, and simpler is better too.
Let the lege start creating lists of what’s necessary and what isn’t?
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p>I sense that’s a blueprint for more back-room lobbying and special interest skulduggery. We need less, not more, of that.
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p>Unless ammunition is exempted. I’m all for that.