USA Today reports on a proposal circulating in the Senate Finance Committee to fund health care through sin taxes on booze.
Beer taxes would go up by 48 cents a six-pack, wine taxes would rise by 49 cents per bottle, and the tax on hard liquor would increase by 40 cents per fifth. Proceeds from the new taxes would help cover an estimated 50 million uninsured Americans.
Matt Yglesias finds this proposal “pretty attractive,” even while acknowledging that the direct public health benefits from reduced alcohol consumption would be minimal. He notes that this would be a “return to the level of taxation that existed a few decades ago” so it “would not be an unprecedented burden on the American consumer.”
That’s probably right, although it strikes me as highly regressive. A flat rate based on the category of beverage is especially bizarre. Why should someone buying a bottle of “Two Buck Chuck” pay the same tax as someone buying a $50 bottle of pinot noir? Matt suggests that we should instead charge based on alcohol content, which would make sense if the aim was mostly to deter excessive drinking. But, since we’re trying to fund a health care system, it would make more sense to tax based on price.
Matt asserts “universal health care is highly desirable and has to be paid for somehow.” I agree with the former, if by “universal health care” we mean that all Americans can afford to get treatment when they’re sick or injured, and the latter necessarily follows. It’s not at all clear, though, why the “somehow” ought to apply to those of us who use a legal, harmless-if-used-responsibly product.
Matt counters that “the incidence would fall overwhelmingly on a relatively small number of problem drinkers (rather than the broad mass of people who drink moderately on social occasions)” but that’s simply not true. Sure, a “problem drinker” is likely to consume more booze than a “social drinker.” But the latter vastly overwhelm the former in number and all of us would pay the tax.
[UPDATE: In a subsequent post, Matt points to Igor Volsky‘s recitation of junk science haven Center for Science in the Public Interest data showing that moderate drinkers would pay almost no taxes — and 35 percent would pay nothing at all! — whilst the top 5% would pay $215 a year. I have no data to offer in rebuttal but personal observation makes me exceedingly skeptical of the distribution.]
Given that we’re likely going to have some sort of taxpayer-funded health program passed during Obama’s run, why not simply impose a consumption tax, perhaps excluding food and medicine, instead? It would be less regressive and wouldn’t single out a single activity for punitive treatment.
Photo by Flickr user zsenya under Creative Commons license.
