The Most Expensive Ingredient in Beer Is….Taxes
Benjamin Franklin once said nothing is certain in this world except death and taxes.
If Franklin was around today, he might want to amend the remark to include the certainty of…taxes on beer.
According to a recent analysis by the Beer Institute, a national beer trade association that represents beer brewers and importers, 45 percent of what consumers pay for a beer goes to taxes.
“That makes taxes the most expensive ingredient in your beer” says Joe McClain, the President of the Beer Institute.
Here is the Beer Institute’s breakdown:
Federal and state excise taxes: When you combine the federal excise tax of $18 per barrel with state duties, it amounts to five cents of every dollar spent on beer.
Sales, wholesale, hotel, over-the-bar and local excise taxes: State and county taxes account for four cents of every dollar spent on beer.
Federal and state business taxes: Brewers, distributors and retailers are subject to the same taxes every other business pays. This accounts for 36 cents for every dollar spent on beer.
In total, the Beer Institute estimates the beer industry generates $44 billion in taxes each year, with the consumption of beer generating $10.8 billion in taxes alone.
As a whole, the brewing industry accounts for $223.8 billion in economic output or 1.5% of the U.S. GDP and employs 1.8 million people directly or indirectly.
In addition to the economic impact of the beer industry, the Beer Institute recently conducted a poll of likely voters and while alcohol and politics may not mix in polite conversation, don’t tell that to beer drinkers. The Beer Institute says those polled appear to be more politically active than the average voter.
68 percent of regular beer drinkers say they discuss what’s going on in the presidential campaign with friends or co-workers and 66 percent say they will be watching the presidential debates, which the Beer Institute says makes them more likely to watch the debates than a the World Series or an NFL game.
In addition 25 percent of beer drinkers say they say they will likely donate or contribute money to a political party, cause, or candidate running for public office and 14 percent (or one out of seven) beer drinkers say they will likely volunteer for a political party, cause, or on the campaign for a candidate running this year.
- By Tom Rotunno, CNBC Senior Editor