Beer Tax Propaganda

An observation: when you see an op-ed title that purports to record-straightening, expect further twisting. Today the Oregonian has a piece by Judy Cushing, CEO of Oregon Partnership, with this title: "The sober truth on Oregon's beer tax." I have no reason to doubt that Oregon Partnership, devoted to fighting drug and alcohol abuse, is a great organization. But Cushing's editorial shades the "truth."

" Oregon's beer tax is less than a penny per 12-ounce container, effectively the nation's lowest beer tax. Those states with a slightly lower beer tax than Oregon have a sales tax that puts their total tax higher than ours. The industry has grabbed headlines with its cries of a 1,900 percent increase. The fact is, any increase looks large when multiplied against almost nothing."

This sales tax argument has been a common one lately. Having already harped on the point, I'll skip the comments on the per-glass cost and move to this new meme--that the lack of an Oregon sales tax makes the beer tax effectively the lowest in the country. This compounds the dishonesty of the per-glass argument, making it appear all the more like a retail tax. It's not--it's an excise tax. Oregon's beer tax is low--everyone will stipulate that--so why cook the data and try to make it the lowest? Not so truthful. I also ding Cushing on shading the reality of the cost. If she is going to complain that the 1900% increase is possible only because we already have a low tax, I'll point out that the percentage increase aside, this tax would make Oregon's beer tax fifty percent more than the next highest state's.

"There is no evidence a beer tax increase would cause job losses or financial ruin for our thriving Oregon brewers. And, in fact, the vast majority of the $320 million that would be raised would come from the major out-of-state beer companies."

Of course there's no evidence--no state has ever attempted to raise taxes even close to this much. That Bud would pay more than Ninkasi is hardly relevant; the huge increase on Oregon breweries might not amount to much of the $320 million, but it could easily be enough to bankrupt the smaller breweries. This is an experiment Cushing is happy to run, but how much does an anti-alcohol CEO care about bankrupting breweries?

On this point, I'd love to hear some real data. I'm ignorant, but it's clearly not a "demonstrable" function of economics based on the anecdote Cushing cites:

"Beer producers say a considerable increase would translate into an additional $2 per pint. That's demonstrably false. A week ago we purchased a six-pack of Widmer brew in Vancouver, Wash. -- where the beer tax is three times that of Oregon's and where the combined local and state sales tax is 8.2 percent. We discovered that a six-pack of Widmer was cheaper -- at $8.69 at a Vancouver Fred Meyer store -- compared with the $9.49 we paid at a Portland Fred Meyer. Who's pocketing the change?"

I share Cushing's interest in drug and alcohol treatment. Obviously, there are many ways to fund these programs, and they're not all created equally. The beer tax, as it's currently written, is a horrible solution. She calls into question the motivation of those who oppose the tax (a "long-standing, cozy relationship many legislators have with industry lobbyists"), but aren't her own motivations conflicted? She says that Oregon breweries won't be harmed, but her professional goal is to reduce drinking. I have no idea how the funding stream would work if this were passed, but I'd also be comforted to know that Oregon Partnership wouldn't receive any of the funds. Otherwise, her argument becomes all the more suspicious.

(I'm often dinged for not offering counter-proposals, so here's one: let's change Oregon law to incarcerate fewer people and spend the money on drug and alcohol treatment. It's better at addressing low-level crime and addresses the root problem. It's a public policy interest we all share, and it should be paid for out of the general fund.)