Many Americans will try a dry january or make a New Year’s resolution to cut back on alcohol in the long term. Those whoever succeeds can benefit in various ways, including reducing calorie consumption, sleep better, improved brain health and lowered risk of injury in a fall or other accident. But lessening the extraordinary harm that alcohol causes to public health and safety should not be left to scattered individual efforts when there is one public policy available that would benefit everyone: increasing alcohol taxes.
The purchase of products ranging from gasoline to movie theaters to houses is subject to what economists call the law of demand. This is a fancy way of describing a common-sense reality: people buy fewer products as their price goes up and more when they go down. There are some exceptions to the law of demand, but hundreds of studies from around the world show that alcohol is not one of them.
So there is a relationship between american alcohol consumption going up and the alcohol price drop during the last quarter century. The average annual consumption of alcohol by Americans increased from 2.15 gallons in 1995 to 2.45 gallons in 2020either 10 cans of beer or glasses of wine weekly. The affordability of alcohol relative to income increased over the same period, meaning that drinking became cheaper. Estimates of how sensitive the purchase of alcohol is to price changes vary, but even the more conservative estimates indicate that the decrease in prices explains most of the increase in alcohol consumption per year.
Alcohol has become more affordable because when federal product taxes were last set in 1991, they were set at fixed amounts, about $1.07 a gallon for most wines and $18 a barrel for beer. Due to inflation, the impact of taxes on the affordability of alcohol has since diminished in real terms. In fact, the biggest change to federal alcohol taxes Congress has made during the term has been cut them for craft beer and spirits producers. (Many states also add taxes on alcohol, which vary widely, but also have generally decreased in real terms over time.)
Many Americans instinctively bristle at the idea of tax increases, and it’s certainly fair for anyone to ask whether the benefits of reduced alcohol consumption might justify a higher tax. But the answer to that question is a clear yes.
Although many people don’t think of alcohol as an addictive and potentially deadly drug, the data attests to the contrary. In 2020 there were some 99,000 alcohol related deaths in the US For comparison, there were 68,630 due to opioid overdose Y 19,480 related to cocaine. There are more arrests for alcohol related offenses than for all illicit drugs combined each year, and alcohol use disorder is more common than any illicit drug disorder among incarcerated people In America. And when asked their perception of whether his attacker was under the influence of a drug, victims of violent crime mention alcohol twice as much as all illegal drugs combined. Therefore, it is almost certain that reducing alcohol consumption would generate great benefits not only for public health but also for public safety.
In fact, economists Phil Cook and Christine Durrance estimated that the federal alcohol tax increase in 1991, which led to a 6% increase in the price of alcohol, reduced traffic accidents, injuries and violent crimes, saving 7,000 lives in that year alone. As most heavy drinkers are men Y men commit about 80% of violent crimes, including spousal assault and rapewomen likely experienced a particularly large safety benefit from the decrease in alcohol consumption brought about by the tax increase.
It is often argued that excise taxes are regressive, meaning that they fall heavily on the poor as they end up spending more of their income on them. But studies on alcohol taxes show that they are paid mainly by people with higher incomesespecially since low-income people have the highest rate of abstention from alcohol, often for cultural or religious reasons.
Therefore, the case for higher alcohol taxes is very strong, and some advocacy groups are pushing vigorously for them. The politically powerful alcohol industry stands in the way, but the experience of tobacco industry and the opioid industry has shown that when the death and destruction caused by a drug becomes more than Americans can bear, political leaders can find the courage to put the public interest above the corporate interest. When the new Congress convenes on Tuesday and focuses on America’s addiction crisis, raising alcohol taxes should be high on its agenda.