Center & Other Research

Alcohol Beverage Tax Rates

Description:
Estimated tax rates for control states will be calculated by applying typical mark-up percentages used at the wholesale and retail levels in open states and subtracting the resulting price from the actual price in that state. Typical mark-up percentages will be estimated from industry data and sensitivity analyses are used to explore the impact of different assumptions. Results are likely to show that spirits are taxed at the highest rates per gallon of ethanol in nearly all states with substantially higher rates for lower %ABV beverages within each beverage type. Estimated control state tax rates are likely to be found to be similar to open state rates in many cases. Interestingly, we expect both the lowest tax rate on spirits (New Hampshire) and the highest (Washington) to be found in control states. It is also important to note that these estimated tax rates do not include typical profits that would have gone to private wholesalers and retailers, but are instead captured by the state in control states and that these captured profits generate more revenue for the states than spirits or wine taxes.  The tasks to be accomplished during the first part of the project will be to provide 1) Comparative evaluation of tax rates and bases for taxation of alcoholic beverage types and sub-types in U.S. states; 2) Analyses of alcoholic beverage pricing processes and 3) Estimating imputed state tax rates for control states.