STANDARD & POOR’S DRI
THE TAX BURDEN ON THE BREWING INDUSTRY
Goals and Scope
Tax burdens include:
taxes paid at all stages of production, distribution, and sales;
taxes related to sales, income, profits, and payroll;
taxes paid to Federal, state, or local governments;
A standard procedure was adopted to obtain reliable, consistent results for these three industries: malt beverages, baked goods, and boats valued over $100,000.
The data sources for the calculations are public, published information primarily from the Department of Commerce and the Internal Revenue Service, allowing confirmation of the conclusions by any interested parties.
Economic value-added components and taxes are presented in both absolute magnitudes (billions of U.S. dollars) and proportions (shares of value added and effective average tax rates.)
1997 was the most recent year for which all necessary data was available, thus this is the reference year for all computations.
Summary of Findings
The tax burden borne by beer consumers is far higher than average for the U.S. economy.
Taxes represent 44% of the retail price of beer. In comparison, total Federal, state, and local taxes equal 31.7% of final sales of all products (GNP) in the U.S., approximately 20% at the Federal level and 12% at the state-local level depending on the year.
In the reference year (1997), taxes on beer raised just under $25 billion. The income generated by beer industry manufacturers and related sales and distribution partners added $10.7 billion in Federal personal income, profit, and payroll revenues and $3.6 in similar state-local revenue. Sales and excise taxes on the beer value-added chain added a further $10.7 billion to government coffers.
In contrast, bakery products are found to be a typical good in terms of U.S. tax burden, with a 33% effective rate. Boats are more highly taxed, with a 36% burden. On the other hand, services and capital goods face lower tax burdens because they tend not to be subject to sales or excise taxes of any type.
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