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Herald trots out the old "double taxation" shibboleth re Question 1

1:17 AM ET, 10/18/2010
Surprise!  The Herald is for Question 1, which would repeal the sales tax on alcoholic beverages.  Its principal argument appears to be that alcoholic beverages are already taxed via the alcohol excise, and it would be wrong to "double tax."

Massachusetts consumers have always paid one tax on beer, wine and liquor purchased in a package store. Yes, it was assessed at the wholesaler level but it was baked into the shelf price and felt at the register.

Now those same consumers pay two taxes on that same bottle of wine or case of beer....

So Question 1 on November's ballot really boils down to whether voters believe it's fair to pay a tax on top of a tax - at a time when unemployment is high and small businesses are struggling.

It isn't.... Question 1 is as much about fairness - about the principle of double-taxation - as it is the effect on shopping habits.

That might not be a terrible argument, if the amount of double taxation that's actually happening were significant.  But it's not.  

The excise tax, as of now, is 55¢/gallon of wine, or about 11 cents per standard (750 ml) bottle; and $3.30/barrel of 31 gallons or beer, or 6 cents per 6-pack of standard (12 oz.) bottles.

So how much "double-taxation" are we actually paying?  Well, the sales tax is 6.25%, so to get the amount of "double tax," you multiply the excise by 0.0625.  Results: for wine, less than 0.7¢ per bottle.  For beer, less than 0.4¢ per six-pack.  In other words, in both cases, less than a penny of "double tax" - and that's the case even if the wine or beer is quite expensive, since the excise is assessed only by volume.

Now, I'm generally not one to trivialize how much people spend on taxes.  But the fact is that in this case, with respect to the amount of "double taxation" we pay on beer and wine under the current system, we are talking about truly trivial amounts of money.  Even on stronger liquors, which are subject to a higher excise ($4.05/gallon) than beer and wine, a typical 750 ml bottle will have a "double taxation" component of about a nickel.

If you want to argue against Question 1 on the ground that alcohol should, on the merits, be exempt from the sales tax, great - knock yourself out.  Let's have that debate.  But don't give me this "double taxation" shibboleth.  It sounds scary, until you look at the numbers.  Then you realize that it's just silly.


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