Anti-Alcohol Activists Set To Cripple the Beer Industry in 2025
In 2021, a newish nonprofit called Oregon Recovers launched their first attack on the alcohol industry. Led by Mike Marshall, now a Portland City Council candidate, they tried to forward a maladroit effort to raise the excise taxes on beer. The ham-fisted effort, conducted in the midst of a pandemic, was clearly intended to cripple the beer industry: they proposed a tax of $72.60 on a barrel of beer, up from $2.60. The tax would have been nearly double the next highest state’s, well over ten times the national median—and a 28-fold increase over current levels. It failed both because it was so extreme and because Marshall made no secret about the fact that destroying the industry was every bit as much of the goal as supporting people with addiction.
He’s stepping down from Oregon Recovers and the organization has stripped away its more extreme language and now focuses on recovery more than targeting the alcohol industry (not exclusively, as we’ll discuss). Still, they’re playing a great inside game and working the refs very well. A couple of days ago, local alt-weekly Willamette Week published an article titled “Oregon Politics Is Awash in Alcohol Industry Donations” that read like an Oregon Recovers press release.
“As soon as January, Oregon lawmakers are expected to weigh an increase in beer and wine taxes, which have remained stagnant for more than a generation. As they do, they’ll have to ignore campaign cash from companies that would like tax rates to remain unchanged.”
Look, alcohol is a dangerous substance and leads to real harms. It’s also a multi-billion dollar industry supporting hundreds of businesses, thousands of jobs, and has become an indelible part of Oregon’s culture. These kinds of misleading articles—there is no mention of where alcohol spending ranks among all industry lobbying, nor, tellingly, where anti-alcohol spending ranks—do nothing to educate the public about the issue. (The alcohol industry is nowhere near the top ten industries, based on the numbers Willamette Week cites.) They’re both actors in a political struggle, and given the stakes and the complexity of the debate, it’s easy to demagogue the issues. I’ve written a lot about this issue over the years, and discussed the 2021 situation here and here, so I won’t cover the ground in the same detail. However, it’s worth posting a big-picture overview of the issues and the stakes so we all understand what we’re talking about.
Let’s set up taxation very briefly. The three legs of the beverage alcohol stool are beer, wine, and spirits, and they’re all taxed differently. Because of that and how the industries are structured, the issues are slightly different; I’m going to be speaking specifically about the beer industry here, not spirits or wine. A lot of people make money on beer: the brewery or producer, the distributor, and the retailer. Both federal and state governments place a tax on breweries (called an “excise tax”), not retailers or wholesalers. Furthermore, these taxes are over and above the regular taxes every business pays to cities, counties, states, and the federal government.
Although the Willamette Week article reports that Oregon’s excise tax is the lowest, that’s not true—but it’s near the bottom, at $2.60 a barrel (or 8.4 cents per gallon). America’s lowest rate can be found in Wyoming, which places a two cent tax on a gallon of beer; Tennessee taxes the highest, at $35.60 a barrel, $1.15 a gallon (though other fees push that even higher). The average (mean) tax in the US is 34 cents a gallon or $10.54 a barrel, and the median is $.26/$8.06.
What’s the Goal?
Why should we place an additional tax on alcohol? This is an important question because it will help legislators understand what the tax will actually do. It could be a way to fund services to address addiction and the other “negative externalities” associated with alcohol (traffic accidents, violence, etc). The State has a real interest in addressing these problems, both because it costs money but also because they have an interest in citizen wellbeing. But it could also be a way to discourage drinking altogether and substantially shrink the beer industry, akin to the way governments aggressively tax tobacco.
How a state sets the excise tax on beer will look very different depending on its goals. If it wanted to fund services to address the negative externalities of beer, you’d expect it to look at what those costs are and set a tax meant to fund them. If it wanted to radically curtail beer drinking, it would instead forget about the costs of services and just set the tax as high as politically possible. The remedy should serve the goal. In politics, you make the best argument you can to achieve your goals, and that sometimes means being a little less than completely honest. In the case of the beer tax, proponents understand that local breweries are popular, so they never mention how badly they’ll be damaged if they’re successful. They therefore propose a tax on the argument that it will do one thing all the while understanding that it will achieve their real and unstated goal.
Should the Beer Industry Exist?
We’ll have to see what proponents draft in the way of legislation, but the 2021 bill and Oregon Recovers’ language make it clear that they care less about recouping costs than targeting the industry. As I mentioned at the top of the post, the 2021 bill would have placed a tax of $2.34 on every gallon of beer ($72.60/bbl). Oregon Recovers has an even more severe proposal of “raising the WHOLESALE price of alcohol 20% and requiring minimum pricing of alcohol.” They follow this up with an extremely weird FAQ about how this won’t hurt the beer industry and will in fact result in its greater health. That is both pure fantasy and a tell about how honest they plan to be about the real costs. Later, they claim it will only raise the price by $.25 a 12-ounce serving—which is false, it will be substantially higher—but $1.50 a six pack is still a massive jump and, needless to say, will not make breweries healthier.
Beer tax proponents should be honest about their goals, which mirror anti-tobacco efforts to marginalize smoking by making it so expensive. That’s a fine goal! I would be completely happy to see cigarettes completely vanish from the earth, and I’ve supported taxes that make it so expensive that people have to be really committed to continue. Not everyone agrees with the position, but that’s the way of politics. Oregon Recovers wants to cripple the beer industry much as I wanted to cripple Philip Morris. I’d be happy to put it out of business and I’m willing to own that.
I suspect the beer industry will be proud to discuss what they offer to Oregonians. Pinot noir is internationally famous. Local beer has become woven into the fabric of Oregon’s culture. It’s fantastic for the economy and tourism as well, and is a part of our state’s identity. Giving Oregon a beer tax an order of magnitude more expensive than the national average will cripple this industry—and that’s plainly the goal. So people should decide if they think that’s a good idea.
Why Aren’t We Taking About The Reasonable Middle?
This final question more or less gives away the game. The Willamette Week article parrots the first talking point of every beer tax proposal: Oregon beer taxes haven’t gone up for 50 years. That’s true, but it’s because for at least the 20 years I’ve been covering these battles, no one has ever proposed an incremental increase. Would breweries like it if the beer tax doubled? What about putting it in-line with the West Coast, which would mean increasing it to around $7 a barrel? No, I don’t think they’d like it. This is a terrible time to be increasing their costs. But they wouldn’t regard it as a literal existential threat. They are responsible members of the business community and care a lot about Oregon. They’d be willing to tackle this issue in good faith, but they aren’t being offered that choice.
Alcohol is dangerous and causes real problems. Beer is an important local industry that generates billions of dollars and is a big part of our local culture. If we were trying to figure out how to address the problems beer causes with a possible tax while supporting this wonderful local industry, we’d have one conversation. Instead, we’re going to get a very different one. Legislators and reporters out there, ask yourselves: why is that?