According to a 2005 study by Global Insight and the Parthenon Group, more than 40% of every beer sold in the United States is consumed by taxes. In fact, the total tax burden adds up to nearly 70% more than the average amount of tax paid in the U.S. on all other purchases. That represents well above $10 billion in extra taxes paid on beer.

The study very carefully examined all of the taxes that eventually become part of the price that consumers pay, and found that for the year studied, 2003, all such taxes totaled to $32 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 another $3.6 billion was generated in similar state-local revenues. Sales, property and excise taxes on the beer value-added chain added an additional $16.8 billion to government coffers.

A tax is considered regressive if it falls more heavily on lower- and middle-income families than on the wealthy. And this is certainly true with beer taxes. This has long been recognized, but perhaps underappreciated. Analyses based on recent data from the Consumer Expenditure Survey clearly show that beer taxes are very regressive, as a percentage of income, costing lower- and middle-income households many times more than those with more comfortable incomes. A recent Beer Institute analysis found that beer taxes are actually 6.5 times higher as a percent of income for lower-income households (those earning less than $20,000 per year) compared to higher-income households (earning $70,000+ per year). As a result, the tax on beer is one of the most regressive of all taxes in the federal and states' tax codes.

Viewed another way, 50% of all beer, is purchased by families with incomes of $50,000 or less, though these households account for less than one-fourth of all income earned in the U.S.

Sadly, the fact that beer taxes are very regressive has been known for quite some time, yet they continue to persist. A strong case can be made for rolling back or reducing beer taxes, based on the simple fact that research has exposed - notably, by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP) - that the overall tax systems in many cases are already disturbingly regressive with many becoming decidedly more regressive in the past decade or more. According to the report, "sales and excise taxes are the most regressive element in most state and local tax systems."

Read most recent 50-state study by CTJ and ITEP

The U.S. brewing industry is a dynamic part of our national economy, contributing billions of dollars in wages and taxes. To learn the full economic impact of the beer industry in the United States, please visit www.beerservesamerica.org.

* Downloading this report requires Adobe Acrobat reader. Get a free copy here.