By DAVID LEONHARDT
Published: December 26, 2007
“We are fortunate to be living in a time when there is a lot of good wine from around the world,” Philip Cook was telling me the other day.
. . . . .
The main cause of this golden age of inexpensive wine is the obvious one: globalization. Once confined to a small part of Europe, the making (and exporting) of great wine is now done across the globe.
But there is also another factor that gets less attention. Since the early 1990s, the federal tax on wine — $1.07 a gallon — hasn’t budged. The taxes on beer and liquor haven’t changed either, which means that, in inflation-adjusted terms, alcohol taxes have been steadily falling.
Each of the three taxes is now effectively 33 percent lower than it was in 1992. Since 1970, the federal beer tax has plummeted 63 percent. Many states taxes have also been falling.
At first blush, this sounds like good news: who likes to pay taxes, right? But taxes serve a purpose beyond merely raising general government revenue. Taxes on a given activity are also supposed to pay the costs that activity imposes on society. And for all that is wonderful about wine, beer and liquor, they clearly bring some heavy costs.
. . . . .
Mr. Cook, besides being a wine lover, has been thinking about the costs and benefits of alcohol for much of his career, and he has come up with a blunt way of describing the problem. “Do you think we should be subsidizing alcohol?” he asks. “Because that’s what we’re doing.”
. . . . And if it were somehow possible to tax only those people who were going to drive drunk in the future, it would be a wonderful idea. (Then again, we might just want to take away their driver’s licenses.) Barring clairvoyance, though, raising alcohol taxes from their current lows seems to be the fairest solution.
Mr. Cook has written a wonderful little book, “Paying the Tab,” making this case. In it, he draws on history, political philosophy and straight economics to point out that higher alcohol taxes would fit squarely in the American tradition.
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