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California's Dime a Drink Tax Proposal

Edward Stringham
April 17, 2009, 10:07am

My new column for the Orange Country Register:

California's taxes just aren't high enough yet. So Assemblyman Jim Beall Jr., D-San Jose, has introduced a bill that would raise alcohol taxes by a dime a drink. The government figures it can raise $1.2 billion a year by taxing every drink you choose to have.

In a press release, Mr. Beall explained why you need to pay more taxes: "The alcohol industry creates devastating problems – traffic accidents, alcoholism – and walks away with money stuffed in its pockets while the public – including nondrinkers – are left to pay billions for the mess."

And you thought that glass of wine with your dinner wasn't hurting anybody.

Mr. Beall is parroting the Marin Institute's deceptive and inaccurate claim that alcohol "costs" California taxpayers $38 billion a year and that high taxes will somehow reduce high-risk alcohol consumption. Let's look at a few ways the folks at Marin allege alcohol is costing you money.

They contend drinking costs the state "$25.3 billion in lost productivity and reduced earnings."

That claim, simply, is false. My 2006 Reason Foundation study found that drinkers earn 10 percent to 14 percent more money than nondrinkers. Men who drink socially, visiting a bar at least once a month, bring home an additional 7 percent in pay.

A 2005 study sponsored by the National Institute for Alcoholism and Alcohol Abuse similarly found that drinking actually increased the returns to both education and work experience. And a 2001 study, "The Impact of Problem Drinking on Employment," found that even "problem drinking is not negatively related to labor supply."

The Marin Institute says another $8 billion in annual costs to taxpayers stem from alcohol-related crime. Research indicates about one-third of violent crimes involve alcohol. The explicit assumption in blaming these crimes on alcohol is that the offenses would not have occurred without it. There is no proof of that. Just as there is no guarantee that criminals committing violent crimes would be upstanding, law-abiding citizens if they refrained from drinking.

The overwhelming majority of people who consume alcohol do so responsibly. At some point, personal responsibility has to enter the equation and the choices people make have to receive the blame.

Full Column at OCRegister.com

2006 Study: Drinkers Earn More Money Than Non-Drinkers



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