Bottom of the Beer Barrel: 12 States With Worst Tax Rates
Current Tax Rate
|Year of Last Increase||Decrease in Real Value||Revenue @ 10 cents per drink increase|
|North Dakota||$0.16||1963||86%||$20.9 million|
|West Virginia||$0.18||1955||88%||$45.2 million|
About the Worst Beer Tax Data
The table above provides the underlying data for the twelve states with the "worst" beer tax rates in the nation. To find these states, three criteria were used: current tax rate (per gallon), the year of last increase, and the percent decrease in real value. Three states: Wyoming, Pennsylvania, and Kentucky ranked at the bottom of the list for all three criteria. Seven states: Idaho, North Dakota, West Virginia, Michigan, Louisiana, Mississippi, and Georgia ranked in the bottom for two of the criteria (year of last increase and decrease in real value). An additional two states, Wisconsin and Missouri, complete the list of the five states with the lowest beer tax rates. The amount of potential revenue from increasing each state's tax rate by 10 cents per drink was generated using the Alcohol Justice Alcohol Tax Calculator.
Years Since Last Increase
What you could buy for $1.00 in 1950 would cost you $8.93 in 2008. This is because over time, inflation causes prices to rise. However, beer taxes are not linked to inflation. Instead, they remain constant until they are increased through policy action. Some states have not updated their excise tax rate for decades, which means inflation has taken a huge bite out of its value. More than half of the states have not increased their excise tax rate in twenty years or more. Because of this, state tax revenue collections suffer.
Because beer tax rates are not indexed to inflation, their real value drops over time. In other words, excise tax revenues essentially decline each year. Inflation has diminished the value of each state's beer tax since the year it was last raised. The erosion of each state's beer tax rate was calculated as the percent change between the excise tax rate and its real value, when deflated from 2009 back to the year it was last raised. For instance, California's beer tax rate of 20 cents per gallon has lost 37 percent of its value since it was last raised in 1991.
1. Year of last increase, as of 2010.
2. Excise tax rates were deflated using annual CPI data through 2009, the most recent year for which annual inflation data were available.
3. State beer excise tax rates and historical changes were obtained from the Brewer's Almanac and Adams Beer Handbook.
4. Alcohol Justice Alcohol Tax Calculator