Thursday, March 22, 2012

About $1.73 a six-pack

Last week, the Nashville Business Journal reported that beer taxes in TN were some of the lowest in the country, based on data provided by the Tax Foundation in Washington, D.C. However, Tennessee gets most of its beer tax revenue from a 17% wholesale tax. If you look at all the taxes the state collects on the sale of beer, TN has the highest overall taxes in the country. I emailed both the Nashville Business Journal and the Tax Foundation, asking them to clarify their stance. The Journal posted a clarification the next day, but I didn't hear back from the Tax Foundation. But Politifact Tennessee picked up on the claim made by the Tax Foundation and reported their assessment of its truth here: http://www.politifact.com/tennessee/statements/2012/mar/20/tax-foundation/tax-foundation-map-shows-tennessee-has-low-beer-ex/

In 2010, the latest year I can find data for, Tennessee collected $122 million from the 17% wholesale tax and $16.6 million from the beer excise tax. Since the excise tax is a flat $4.29 per barrel, you can calculate that 3,896,464 barrels of beer were sold in TN in 2010. Combining the wholesale tax and the excise tax meant the AVERAGE total taxes on beer in 2010 were $35.82 per barrel, the highest in the country (a barrel is 31 gallons).

But since the wholesale tax is a PERCENTAGE of the wholesale price of the beer, more taxes are collected on craft beers than on the lower-priced beers of ABInbev and SABMillerCoors! The average wholesale price of cheap beer is around $19 a case. The average wholesale price of a case of craft beer is around $27.

So that $5.99 six pack of cheap beer has about $0.65 in wholesale tax and $0.55 in sales tax, for a total of $1.20 in state taxes. A craft beer at $8.49 a six pack has about $0.94 in wholesale tax and $0.79 in sales tax, for a total of $1.73 in state taxes.

2 comments:

Ken Johnson said...

So, without getting specific... Who makes more off of all your hard work? You or the State?

$1.44 per 6-pack is a pretty good margin for someone who has almost zero investment in your enterprise and stands to lose nada if you go belly up.

P.S. Thanks for some great beers!

Ken Johnson said...

So I just came across this article.

http://finance.yahoo.com/news/beers-most-expensive-ingredient-taxes-211808621.html

Unless brewers are making over 40% profit then the State is getting rich with barely any effort.