One of my favorite Dave Matthews Band songs is titled with a phrase that can be applied to pretty much all aspects of life: “You pay for what you get.” This, of course, applies to craft beer as well. Independence will always come with a price attached, let alone big ABVs and strange combinations.
However, one area that most people fail to understand is where that price on the shelf comes from. The majority of it will come from the individual brewer/wholesaler/retailer relationship. Much like anything else, there will be some mark-up from cost, so that everyone winds up making a semi-decent profit. (Gotta remember, these are difficult economic times; prices can’t be too outlandish.)
So, after that, where does the remainder of cost come from? That beautiful, beautiful thing: the man.
Governmental regulation on industry is nothing new; the Constitution essentially lays the foundation for it. The footing that taxation on products and services stands on is actually laid within the 10th Amendment, reserving powers not delegated in the Constitution to the federal government to the states. This is where the argument for “state’s rights” comes into play, although it’s kind of hard for a state to have a right when a right is a limit on governmental power.
There are two different types of taxes levied on beer. The first one is a type of excise tax; essentially, a tax to pay for the regulation of industry. This tax, however, is hidden from the consumer. It is typically paid for in the sticker cost of your booze. It is applied by the volume sold. This rate is different in every state, and is usually your explanation for variance in price from state-to-state.
Of course, there is also sales tax to contend with, which means you’re getting hit twice every time you want to get your drink on. Some states hold exceptions for alcohol sold from a retail location (e.g., Massachusetts before August 1st), and will only charge when you’re drinking out at a bar, at which point you’re paying a service tax.
So the next time you reach out for that bomber of Brooklyner-Schneider Hopfen-Weisse (thank you, Josh!)…smile and realize that you’re doing your country proud and paying the man.
[Editor’s note – Interested by this intro to beer taxes? Check out Beer Therapy’s super-duper in-depth examination of beer taxes in this article about a proposed beer tax increase. Cheers!]