You love the blog, so subscribe to the Beervana Podcast on iTunes or Soundcloud today!

Friday, March 18, 2016

Taxes and Production

The Tax Foundation sent me the following graphic about beer taxes in the US. It is interesting largely because the difference between low tax states (around a dime a gallon or less) are way lower than the high tax states (in some cases over a buck a gallon).

I wondered, how does this compare with the production numbers in those states? No time to do a sophisticated analysis(Ireland planning!), but the raw numbers are at the very least suggestive.


  1. I think Tennessee's data is even inflated a good bit by the contract brewing numbers from City Brew in Memphis, the old Coors plant, that brews for Sixpoint and 21st Amendment, which aren't even distributed in the state!

    We are in the lower half for taxes on liquor though. The distilleries have had the ear of lawmakers for a long time, but we are slowly making progress. Before 2013, the tax on beer was actually a percentage of your wholesale price - meaning a typical six pack of craft at $8.99 a sixpack had about $58/ barrel in taxes taken out. Our state guild got that law changed to a flat per-gallon tax, but to get it passed we had to make it revenue-neutral for the state. So we still have the highest beer taxes, but at least the effective rate on craft beer came down to the average.


    Linus Hall
    Yazoo Brewing

  2. It does suggest that there is no discernible relationship between beer taxes and production rates. But I do find it fascinating that there is beer production in Washington DC. The last time I was there I don't think there was a single brewpub in the city.

  3. DC's first brewpub opened in 1992; its first 'craft' production brewery in 2011. The city now has 11 'craft' breweries: 5 of which are production-only; 6, brewpubs.

  4. It's hard for me to puzzle out whether low taxes are cause of higher production or not. Did the low rates in Wisconsin, Missouri and Colorado give Miller, Budweiser and Coors big advantages, or did the lobbying power of Miller, Budweiser and Coors make sure that taxes stayed low in those states?

    I'm guessing it's the second case, but you'd probably need to look at historical data to get a good handle on things.

  5. It should be noted that state excise tax is paid on all beer that is to be sold in the state, regardless of the location of the brewery.
    The tax is not paid on all the beer brewed in the state.
    In most states, the wholesaler is responsible for paying the excise tax (as the NBWA is quick to point out), brewers typically pay it only when they are in-state. (source - Brewers Almanac, The Beer Institute).

    Thus, the high rate on Tennessee beer has nothing to do with City's Memphis brewery's contract production that is shipped out of state. It is a case of TN, like all states, having an excise tax on beer based on volume, AND, a wholesale tax:

    Beer Barrelage Tax: $4.29 per bbl

    Beer Wholesale Tax: $35.60 per bbl

  6. They are definitely a factor, but they aren't the ONLY factor. Here in SC, they changed a bunch of laws to allow for easier revenue streams despite the high taxes, and that was all the push "Craft brewing" needed to take off like a VC-fueled rocket. Margins are awfully tight still, and they're going to get worse as the bubble attenuates (another 7 breweries coming in the next year).

  7. argues that there are some significant problems with this map.

    I can't begin to understand everything being argued here, but it's pretty clear that the Tax Foundation's map is trying to single out just a piece of the multiple taxes that can be levied on a volume of beer, and as a result is giving a pretty misleading view of how things compare state by state.

  8. Looking at the map, doesn't there seem to be a something of a high-tax concentration in the Bible Belt?