In response to Illinois’ statewide prohibition of alcohol in the 1840s, Abraham Lincoln noted that “prohibition goes beyond the bounds of reason in that it attempts to control a man’s appetite by legislation and makes a crime out of things that are not crimes. A prohibition law strikes a blow at the very principles upon which our government was founded.”
Neo-prohibitionists do not advocate for full prohibition, perhaps because it is such an unpopular proposal. Modern day advocates, such as Dr. Tom Farley, former Commissioner of Health for New York City, will praise the Prohibition of the 1920s for reducing alcohol consumption, while advocating for “curve-shifters”, such as punitive taxes, to significantly reduce alcohol consumption. Putting the curve-shifter idea into action, policy groups in New Mexico are advocating for a 25-cent tax per drink in bars, restaurants, and stores.
Just as Abraham Lincoln noted with respect to prohibition, targeting alcohol for punitive taxes is inconsistent with our country’s founding principles. It punishes the millions of people who enjoy alcohol responsibly based on a nanny-state justification that public health officials know better than individual adults regarding what their personal lifestyle choices should be.
The problems with the tax proposals run even deeper, however. Relying on technical sounding terms and studies, public health officials create a fictional straw-man that allegedly justifies ever-greater alcohol taxes.
The straw-man starts from a true premise: abusive, or excessive, drinking is a real problem that the CDC associates with motor vehicle crashes, violence, and other risky behaviors. And, effective solutions to abusive drinking are necessary.
Where their argument falters is the follow up to this true premise – that higher alcohol taxes will reduce the problems of excessive drinking and will not burden the average consumer of alcohol. Both of these claims are demonstrably false.
In contrast to the neo-prohibitionists claims, people who are abusive drinkers should also be, by definition, the people who are the most insensitive to price increases on alcohol. Not only is this logical, this is exactly what the research shows.
For example, a 2011 study funded by the National Institute on Alcohol Abuse and Alcoholism NIAAA (the government’s lead agency on alcohol abuse) found that taxes had a large and significant impact on the consumption patterns of light drinkers, but a substantially smaller impact for moderate and heavy drinkers. In its January 2001 issue of Alcohol Alert, the NIAAA suggested the heaviest-drinking 5 percent do not reduce their consumption significantly in response to price increases, unlike drinkers who consume alcohol at lower levels.
As a result, one of the fundamental justifications for raising taxes on alcohol is false – higher taxes will not reduce the problem of alcohol abuse and are, therefore, not an effective policy to address the problems associated with abusive drinking.
Higher taxes will impose a large burden on the typical alcohol consumer, however, including moderate drinkers. And, moderate drinking is not associated with the social problems of abusive drinking. In fact, some studies have linked moderate drinking to potential health benefits including reduced risk of heart disease, stroke and diabetes.
Nevertheless, proponents of tax increases will falsely claim that the economic costs from the tax increases will not be borne by moderate drinkers, but instead, by abusive drinkers. Such claims are politically useful because the average adult who consumes alcohol may be reluctant to voluntarily impose alcohol taxes on themselves if they realized who really bore the costs.
In order to substantiate the claim that abusive drinkers pay most of the costs, proponents rely on an unrealistic definition of an abusive drinker.
Typically, the definition of a moderate drinker is a woman who consumes one drink a day, or a man who consumes two drinks a day. The proponents of raising the alcohol tax in New Mexico define anyone who exceeds the definition of a moderate drinker as an abusive drinker. Such an expansive definition of abusive drinking is not atypical.
Therefore, a man who consumes two glasses of wine with dinner except on Saturday, when he consumes three, is considered an abusive drinker. Similarly, a woman who consumes a glass of wine every day except Saturday, when she consumes two, is also an abusive drinker.
Clearly, there is a difference between someone who slightly exceeds the defined level of moderate drinking and abusive drinking. And, leveraging these bait and switch tactics allows proponents of tax increases to claim that abusive drinkers bear the majority of the costs.
In reality, a majority of adults in the U.S. consume alcohol regularly, and their consumption levels are consistent with the typical definitions of moderate drinking. Raising taxes on alcohol will impose large costs on these average alcohol consumers and place a large economic burden on non-abusive drinkers, while doing little to address the problems of alcohol abuse.
Donald Rieck is President of the American Spectator and Editor, EconoSTATS and Wayne Winegarden, Ph.D., is a Sr. Fellow in Business & Economics at the Pacific Research Institute and Contributing Editor, EconoSTATS