Against sin taxes and soft prohibition

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Erik Kain

Erik writes about video games at Forbes and politics at Mother Jones. He's the contributor of The League though he hasn't written much here lately. He can be found occasionally composing 140 character cultural analysis on Twitter.

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52 Responses

  1. Avatar North says:

    Agree on all counts.

    Also of course there’s also the issue of smuggling. If you levy sin taxes you get revenue streams. If you raise those sin taxes you get some decrease in the sin. But very soon you end up with smuggling. A smuggling network is like water flowing over sand. Initially it’s vague and washes around a lot but after a bit of time it cuts a channel and becomes efficient and fast. If you raise sin taxes you get a TEMPORARY drop in sin and a revenue stream followed by an increase in sin and a decrease in revenue. Even worse of course is that in black markets you also get more dangerous sin. When people smuggle they smuggle the stuff that’ll get the most bang for the buck. In prohibition it wasn’t beer that people were smuggling, it was hard liquor like gin, the prohibition regime likely turned entire generations of beer drinkers into gin drinkers. Prohibition and sin taxes in general encourage the use of more potent and dangerous versions of the substances that you’re trying to get rid of.Report

    • Avatar Michael Drew in reply to North says:

      You were the guy the other day questioning the black market in the practice of medicine during a serious shortage, but you think a black market will crop up in response to a modest hike in the alcohol. I don’t even know how that would work. Can you sketch it out for me?Report

      • Avatar North in reply to Michael Drew says:

        Well health care currently doesn’t fit into markets the way sin products do. Also I didn’t say a black market couldn’t appear in health care, I was just confused as to how Jaybird was coming to his conclusion that one would appear as a result of HCR.
        We’ve observed smuggling for cigarettes and the way it waxes and wanes based on relatively small changes in sin taxes on cigarettes.

        In fairness though I should have specified that there’s some gap between the beginning of sin taxes and smuggling commencing so obviously there is a non-zero amount of sin taxes you can levy without having to be worried about smuggling.

        I still don’t like sin taxes. They’re a variable revenue stream, generally unpopular and smack of obnoxious nanny state attitudes that left wingers should probably go to great pains to avoid.Report

        • Avatar Michael Drew in reply to North says:

          In case you hadn’t noticed, North, revenue streams vary. It’s just one of their features (bugs).

          I’m just having a hard time picturing this. Where do people end up buying these smuggled cigarettes? I was clueless about this. The tax on alcohol is already pretty significant. Is this a permanent situation you’re describing, or is more of a temporary reaction to the outrage of it all? If that’s what it is, it doesn’t seem like a fundamental problem for the policy, though likely a loser for politicians, which I think Yglesias gets and I certainly get — he’s just claiming there’s a really good policy rationale for it. What am i missing in my world where black markets in these products exist and I don’t see it? (Honestly.)

          As for the nanny state, I think that is subjective, and I tend not to see reasonably-sized sin taxes as nanny statism, but rather just an overall wise way to implement an unfortunate necessity. There are so many reams of outright prohibitions on enough things that are harmful only to one person that extending the argument to simple taxes on harmful behaviors in my mind is excessive. Again, i only support this inasmuch as increased revenues are necessary (and even then, I’m basically indifferent, or even against on regressivity grounds). But I agree it’s likely to be received that way. Again, Matt’s is a policy case in the context of revenue shortfalls, and there I think it’s pretty good, except for the regressive part.Report

          • Avatar Jaybird in reply to Michael Drew says:

            I keep hoping to tax buttinskyism.

            We’d be able to pay for every child in the world to get a free ride to Harvard.Report

          • Avatar North in reply to Michael Drew says:

            I don’t think that revenue streams based on products you’d like to diminish the use of are typically feasible for funding. You’re talking about intentionally self diminishing revenue streams.

            I haven’t heard a lot about alcohol smuggling but cigarette smuggling is a very large deal especially in New York and along the Canadian border or near reservations. People typically buy the bootleg cigarettes from the same place that they buy normal cigarettes but at a slightly reduced more competitive price (at a cost to law abiding competing retailers) and the smugglers and retailers pocket the remaining difference. I would never attribute this to outrage or principle, people just follow the dollars. You’ll see some mild examples of alcohol smuggling in all the rigermarole around duty free stores and coming in and out of the country with liquor but, being as it is heavy, alcohol logistically is less lucrative than tobacco for smuggling.

            I’ll agree that the nanny state bit is subjective but politically I see a lot of votes lost to the left for excessive nanny statism but very few lost for insufficient of the same. I think the Dems could move a lot towards the center on prohibition and sin taxes and reap significant electoral benefits.Report

  2. E.D., I don’t think you’ve thought this one through. If anything, I think most of the argumetns you make tend to support the case for the tax. The basic concept you seem to have skipped over here is ‘quantity.’ A tax is not “soft prohibition.” it’s a tax. And as Yglesias specifically points out, he wouldn’t be for this tax if it wasn’t clear that the government was legitimately going to be in need of additional sources of revenue in coming decades, even in the most austere spending scenarios that are reasonable to contemplate. So this is first of all motivated by the most legitimate reason for taxes. Beyond that, it just isn’t that case that taxing something, even if the motivation is to decrease its use, amounts to any form of prohibition. Limiting use by statute — that does. But a tax is simply trade-off. You can do it but it costs some more. It’s just not a prohibition. And it most certainly does not tax alcoholics more than occasional, moderate drinkers. Because they don’t drink the same amount (presumably). Which is the point of the tax — it encourages moderation, which is your condition for defending consumption of beer.

    As for it being self-defeating, I doubt it. I seriously doubt this will actually have much effect on consumption (do you, really?) — which is okay, since the point is revenue. But if it does, well, that’s okay too, since most drinkers do not, in fact, drink in moderation (I know I’m still regretting last weekend).

    The best argument against the tax is simply that it is regressive, as all sales taxes on everyday consumer goods are. And that’s a pretty damn good argument by my lights. Soak the rich!Report

    • Avatar jacobus in reply to Michael Drew says:

      “since most drinkers do not, in fact, drink in moderation”

      Is this, in fact, true? Or is it just that the people you notice at 130am on Saturday morning have not, in fact, drunk in moderation?Report

      • Avatar Michael Drew in reply to jacobus says:

        Even if most drinkers do, in fact, drink in moderation, the point is that the incidence of this tax will primarily be, in fact, on those who don’t. And the more people there are who drink in moderation and are therefore (maybe!) arguably unfairly hit by this tax, the less in fact they are so hit, because that numerically implies that those who do not drink in moderation are consuming that many more of all the drinks, and will therefore bear that much more fair a part of the burden.Report

        • Avatar Jaybird in reply to Michael Drew says:

          Ah, an opportunity to tell a story.

          Way back when, there was a group of people who call themselves “Progressives” who wanted to make the world a better place. One of the things they tried was “Alcohol Prohibition”. They argued that the evils of alcohol were such that only its absolute prohibition would result in everybody being better off. They called this “Temperance”.

          In any case, they successfully made the consumption of alcohol illegal in the US. Beer, wine, and hard liquor.

          Well, a very interesting thing happened. People kept drinking anyway.

          Maybe that’s not *THAT* interesting but what is interesting is *WHAT* they drank changed. Beer and wine, you see, don’t pack much of a punch for what you actually end up with. A six-pack (bottles) of beer will get you about as drunk as a bottle of wine will get you about as drunk as 4 shots, that’s six ounces (!), of a decent whisky.

          So let’s say that you’re a smart guy who wants to make a quick buck by smuggling in 60 ounces of something. Are you going to smuggle beer, wine, or whisky? Well, I don’t know what answer you would give but the answer the guys back then gave was “whisky”.

          So, basically, people who wanted to enjoy a beer or glass of wine despite the efforts of the good hearted people who wanted to make them better had to choose between Temperance and drinking whisky.

          Prohibition turned beer-drinkers into whisky-drinkers because of the costs associated. Additionally, people who enjoyed an occasional tipple had to become people who got nice and hammered because, hey, your supplier has whisky this week, who knows if he will have whisky next week or the week after? He’s got it now, better get ripped.

          In any case, these measures intended to help people be Temperate resulted in them buying whisky instead of beer and a lot of whisky instead of just some.

          And now you are saying that the people who drink moderately will be the least impacted by this new law.

          Do you understand that it was argued that the people who drank moderately would be the least impacted by Prohibition?Report

          • Avatar Michael Drew in reply to Jaybird says:

            E.D., do you think you’ve done the world a favor by drawing this comparison?Report

          • Avatar Michael Drew in reply to Jaybird says:

            Just to respond. First off, you can’t argue against a modest or even moderate tax increase by arguing against prohibition. Full stop.

            But to take up the argument nevertheless, it’s not clear to me that the effect of a switch from beer to wine to whiskey on a scale commensurate with the size of this tax increase (and to be clear, I wouldn’t support a beer-only tax, so it would be a small scale indeed), would have much impact on health or accidents. Moreover, I the demands for these specific products are going to be somewhat elastic in their areas — drinking beer, wine, and liquor are pretty different experiences, and only some drinkers will switch products due to a small or moderate price change in one of them. Maybe I’m underestimating that, but I’d certainly be willing to take the bet that if hard liquor consumption spiked (not as a part of overall alcohol consumption but in pure numbers) after the tax went into place, I’d call the policy a failure — unless overall alcohol-related health costs declined over the course of a couple decades, which after all is the point to begin with, and would justify the policy, even if people were drinking more whiskey on the way to it.

            I kind of can’t believe you’re arguing as if there’s no difference between a tax and prohibition, Jaybird. I think you sound insane, but maybe everyone here feels you.Report

            • Avatar Jaybird in reply to Michael Drew says:

              I’m used to sounding crazy, dude. It’s cool.

              My argument is not an argument against Prohibition, per se. Indeed, you’re not arguing for Prohibition. You’re just arguing for an increase in “sin” taxes on “sinful” things. Any overlap between this attempt to stop people from sinning and Prohibition is co-incidental.

              Sure.

              But without getting into the justification for taxation, this will result in a tax that hits “the poor” hardest. Let’s say we increase the tax on every ounce in that liquor store equally. A can of beer gets a dime, a bottle of wine gets a quarter, a bottle of Laphroaig will get four bits.

              Who will be most affected by this? It seems obvious to me that the people most affected will be the people buying a 30 of Milwaukee’s Best and the people buying a bottle of Chateau du Jaunay Muscadet Sèvre-et-Maine won’t even notice.

              Do you agree with that?

              Additionally, do you agree that the increased taxation of cigarettes has led to a black market in cigarettes? If you agree that the increased taxation of cigarettes has led to a black market in cigarettes and you agree that the people who will be buying cases of The Beast will be most impacted by this level of increased taxation, I’d ask if you really see it as unlikely that a black market will be created by your imposition of a “sin” tax.

              And, from there, I’d ask you why you think that the creation of a black market in alcohol as a likely outcome of your proposed taxation should *NOT* lead me to start making comparisons between your “sin” taxes and the last time we had a black market in alcohol worth mentioning?

              I’d then go to noticing that the black market would exist only for people in a particular economic category… and, then, I’d wonder whether law enforcement enforcing these laws against the black market would all come down in certain parts of town… you know, like drug busts did for decades.

              And then, I’m sure, you’d point out that you are only proposing a small tax on beer, Chateau du Jaunay Muscadet Sèvre-et-Maine, and Laphroaig and my bringing up cops busting poor people is completely inappropriate and that, once again, I’m sounding crazy.Report

              • Avatar Michael Drew in reply to Jaybird says:

                – i could give a shit about the sin aspect. it’s the cost issue.

                – it absoutely hits the poor hardest – i stated that in my first comment. i’m okay if we soak the rich instead

                – whom it hits depends how it is implemented of course. per container – obviously as you state. per dollar, well the rich still won’t care, but they’ll notice and might cut back a bit.

                – i am reliably informed a black market in cigarettes exists on borders to where the tax is less or duty-free is available. the same thing probably will (does)happen with booze. i see this as a localized, limited problem. also, i don’t want to “impose” a tax on alcohol — it is already imposed. it is status quo.

                – i don’t see a widespread black market as likely, but even if i did, the mere presence of a particular phenomenon in two scenarios, especially
                if the scopes are vastly different in each case, doesn’t make the scenarios comparable necessarily. also, in the places where a black market in booze might exist after this was done, one likely already does, as this is just an increase in a tax that already exists – the world is still an okay place for it.

                – yes, that particular economic category = people who want to save money. busts for the black market would probably come down where it was occurring.

                – I’m still having a hard time picturing just exactly what you’re suggesting would be happening and where in this black market other than as relates to borders and duty free (which i actually don’t think would be exclusively poor people), but in any case if poor people were engaged in it primarily, and it became a public nuisance to the extent that it became an enforcement priority,then probably some poor people would get busted for it. i’d support letting them go with a slap on the wrist, even if it was the third strike.Report

              • Avatar Jaybird in reply to Michael Drew says:

                “i could give a shit about the sin aspect. it’s the cost issue.”

                Fair enough… but then you say:

                “it absoutely hits the poor hardest – i stated that in my first comment. i’m okay if we soak the rich instead”

                Let me ask you this:

                Who, in society, is imposing the greatest amount of “cost” by use of alcohol? Is that measurable? Do you think that there might be trends? Would Night Train be responsible for more alcohol-related societal costs than Coppola?

                “whom it hits depends how it is implemented of course”

                Should it hit hardest the people who impose the most costs? If not, why not?

                “the world is still an okay place for it.”

                Is it acceptable to say that the world would still be an okay place without this additional tax? If not, why not?

                “i’d support letting them go with a slap on the wrist, even if it was the third strike.”

                So you’d be fine with imposition of a law that is not really that enforced and doesn’t really have that bad of a punishment for breaking it, even if it is habitually broken?

                How in the world is that preferable to not passing the law in the first place?Report

              • Avatar Michael Drew in reply to Jaybird says:

                It should hit hardest those who impose the most costs. Therefore the unit of imposition should be the one that approximates that best. That will probably by “individual serving” i would think. Yes, that would hit the poor hardest, but we already knew this would hit the poor hardest. When i say we should soak the rich instead, i don’t mean via the alcohol tax (though I’d be fine if we only imposed it on them just for sheer hell of it). We should just soak the rich. But if you’re going to impose an alcohol tax partly for revenue but also partly to discourage excess use that imposes eternal costs, you have to be okay with doing that discouraging even among the poor. As Mark points out in his post – social programs are about helping the poor; if this is partly a tough treatment for all who impose costs on social programs this way, it has to apply to those in social programs to. I’d be okay with raising the alcohol tax and quietly slipping the money back in their pockets via payroll tax or assistance check. The point is to raise the cost of alcohol vis-a-vis other goods (if you’ve decided you need to raise revenue this way, which I have said I don’t think should be assumed).

                So yes, OF COURSE the world would be okay if this was not done. it’s not make-or-break AT ALL.

                So you’d be fine with imposition of a law that is not really that enforced and doesn’t really have that bad of a punishment for breaking it, even if it is habitually broken?

                WTF? The law already exists – you can’t smuggle booze to avoid the already-existing tax. That’s right now. I don’t really care how tightly it’s enforced, and I don’t support stiff penalties for it. That’s already – right now. if the tax goes up and the breaking of that law becaomes some huge problem, maybe i’ll revisit that, but I doubt it, because I don’t think it will become some huge problem. This is not a new law, or a new tax.

                This is about how law-abiding people respond to price signals, and revenue. If they respond purely by shifting the exactl deferred amount of consumption from the tax into an illicit market, then, sure lose the increase. But you know that won’t happen. You have fantasies that it will, but you know it won’t.Report

              • Avatar Jaybird in reply to Michael Drew says:

                I don’t like reshuffling money from the poor in order to pay for programs for the poor. It strikes me as exceptionally inefficient and, like it or not, comes across as “we think poor people should drink less” (which, it seems to me, will result in poor drinking harder stuff that gives more bang for the buck rather than them actually drinking less).

                As for “social programs helping the poor”, I don’t know that the argument that “the poor” are better off today than they were prior to Johnson’s War On Poverty is airtight. One could look at schools, or literacy, or violence, or children born out of wedlock, or a lot of stuff and I don’t know that social programs to help the poor are doing their jobs.

                To the point where I think we ought to try something else entirely. (I’m a fan of education reform, (completely different) health care reform, and welfare reform.)

                I think that programs that treat citizens like perpetual adolescents will result in perpetually adolescent citizenry… and how our country treats alcohol consumption strikes me as topsy-turvy and I think that we ought to be a hell of a lot more like France.

                “This is not a new law, or a new tax.”

                It’s just an increase of an existing one with, ideally, the money slipped back to the people? That strikes me as new enough to qualify as new, for the record.

                “But you know that won’t happen.”

                I don’t, actually.

                But, for the record, Billy Sunday said this when the 18th was adopted (from wikipedia): “The reign of tears is over,” he asserted. “The slums will soon be only a memory. We will turn our prisons into factories and our jails into storehouses and corncribs.”

                He had a lot more certainty than I would have.

                You seem to have a lot more certainty that people will be helped by this tax than I do.Report

  3. Avatar Sam M says:

    Excellent post. My one qualm would be: If it makes no sense to tax the booze, why tax the pot? You can make the case that legalizing and taxing the marijuana is loosening rules rather than tighetening them, which I support. But once that’s done… it seems to me that all the arguments you make against a tax on beer also apply to marijuana.Report

  4. Avatar malcolm kyle says:

    Great article Mr Kain! If only we could all think as straight as you!

    Prohibition is a sickening horror and the ocean of human wreckage it has left in its wake is almost endless.

    Prohibition has decimated generations and criminalized millions for a behavior which is entwined in human existence, and for what other purpose than to uphold the defunct and corrupt thinking of a minority of misguided, self-righteous Neo-Puritans and degenerate demagogues who wish nothing but unadulterated destruction on the rest of us.

    Based on the unalterable proviso that drug use is essentially an unstoppable and ongoing human behavior which has been with us since the dawn of time, any serious reading on the subject of past attempts at any form of drug prohibition would point most normal thinking people in the direction of sensible regulation.

    By its very nature prohibition cannot fail but create a vast increase in criminal activity, and rather than preventing society from descending into anarchy, it actually fosters an anarchic business model – the international Drug Trade. Any decisions concerning quality, quantity, distribution and availability are then left in the hands of unregulated, anonymous, ruthless drug dealers, who are interested only in the huge profits involved.

    Many of us have now finally wised up to the fact that the best avenue towards realistically dealing with drug use and addiction is through proper regulation, which is what we already do with alcohol & tobacco –two of our most dangerous mood altering substances. But for those of you whose ignorant and irrational minds traverse a fantasy plane of existence, you will no doubt remain sorely upset with any type of solution that does not seem to lead to the absurd and unattainable utopia of a drug free society.

    There is an irrefutable connection between drug prohibition and the crime, corruption, disease and death it causes. If you are not capable of understanding this connection, then maybe you’re using something far stronger than the rest of us. Anybody ‘halfway bright’ and who’s not psychologically challenged, should be capable of understanding, that it is not simply the demand for drugs that creates the mayhem; it is our refusal to allow legal businesses to meet that demand.

    No amount of money, police powers, weaponry, diminution of rights and liberties, wishful thinking or pseudo-science will make our streets safer; only an end to prohibition can do that. How much longer are you willing to foolishly risk your own survival by continuing to ignore the obvious, historically confirmed solution?

    If you still support the kool aid mass suicide cult of prohibition, and erroneously believe that you can win a war without logic and practical solutions, then prepare yourself for even more death, corruption, terrorism, sickness, imprisonment, unemployment, foreclosed homes, and the complete loss of the rule of law and the Bill of Rights.

    “A prohibition law strikes a blow at the very principles upon which our government was founded.”
    Abraham Lincoln

    The only thing prohibition successfully does is prohibit regulation & taxation!Report

  5. Did you (and more importantly Daniel McCarthy) actually read Mark Kleiman’s article? Given that his entire piece is based on a comprehensive reform of drug policy, including legalization of marijuana use and private growth (but not giant commercialization), abolishing the minimum drinking age, no longer throwing dealers into jail, etc., this narrow reading of his sin-tax argument is both disingenuous and unfair. Taken in the context of his broader argument, the sin tax on beer, and the argument that it be used to fund the externalities associated with alcohol consumption make plenty of sense.

    Let’s make one thing clear: sin taxes are supposed to be used to pay for the externalities generated by the activity. The fact that you reduce some of the behavior is INTENTIONAL and the whole point is to reduce the negative externalities generated by the activity, not raise revenue for some other purpose. (This is why many of the tobacco taxes in the US fail in their premise) Kleiman is explicitly advocating raising the alcohol tax AS A WHOLE (with beer as a specific point because it costs so much less than other alcohol) to offset the negative externalities generated by alcohol consumption. He being an economist, seems to have a weird faith that the politicians won’t eventually misuse this tax, but his purpose in creating it is explicitly to have it either be unnecessary or at least slowly reduce the amount of income by encouraging different types of behavior.

    But let’s go a step further since your point seems to be about communitarian positive externalities that come from alcohol.

    The sin tax can be targeted in such a way to reduce personal consumption of alcohol, but encourage for example communal consumption. You can place one type of beer tax on things you buy at the convenience store, and then either exempt bars, or at least reduce the amount of tax that’s placed when sold at a location that requires the alcohol be consumed on premises. This has the added benefit of placing a social pressure on how much people consume because of the costs associated with getting ridiculously hammered in public.

    If for example we then combined this with the removal of the minimum drinking age (or at least lowering it significantly to cover many teenagers) you could create a better socialization process for alcohol consumption and reduce the possibility of creating really heavy users while keeping, or even expanding the beneficial sides of alcohol consumption.

    I’m also inclined to say that maybe we should be a bit more strident about anti-marketing campaigns for alcohol by government like was done with cigarette use and limitations on how and when companies can market alcohol given the power of marketing departments to define social preferences. Kleiman obliquely touches on this point when he discusses marijuana legalization (and how it’s undesirable to let it be entirely commercialized, and instead should simply be a matter of letting people grow their own) but that’s me being the big bad statist again, I suppose.Report

    • “not raise revenue for some other purpose.”

      A significant portion of the negative externalities come in the form of medical costs from DUI and long-term disease, in other words health-care costs. These are costs that will simply be rolled into the general health care system, whichever way. Health care is simply government’s one overriding cost liability going forward. In theory, yes, one could do the accounting necessary to try to guide these dollars to addressing alcohol-related health-care costs, but why bother? the point is just to discourage excessive use, and raise revenue. If alcohol abuse prevention programs are shown cost-effective, okay, fund those first with this money, but if they are proven cost effective, we should fund them anyway. Money is fungible. the one thing that would seem important would be to see that the revenues raised go to the levels of government that bear the related costs. If that is primarily states, the feds could offer matching funds to those states that raise the tax to X.

      Again, people are completely within their rights to object to this as nanny statism creeping into our lives, and they will, but health costs public and private are really the issue, and this is a rather obvious way to help those on both counts. The claim that the revenues will be targeted only to the specific negative externalities of this specific behavior is really kind of a neat formalistic way to sell it — even if it’s done in practice. Net-net, it’s just a good move, on the assumption that revenues will be tight, and government will be being forced to prioritize in response to public demands in any case.Report

  6. Avatar Jonathan says:

    Admit E.D., you’re just worried that after they attack beer, they’ll attack sandwiches, and there’s no way you’re going to let that happen!Report

  7. Avatar Jaybird says:

    Crazy Jaybird Time

    This is what happens when you make everything everybody’s business. Suddenly you start finding yourself inventing sins and then punishing them.

    The problem comes when not everybody agrees that it is a sin… and, even if it were, that it is your business to do what you can to make the world a more sinless place.

    When everybody becomes responsible for everybody else, however, things that didn’t used to be my business (or anybody’s) suddenly become everybody’s.

    You shouldn’t drink so much.
    You shouldn’t smoke so much.
    You shouldn’t eat so much sodium.

    Seriously: When you were a kid, did you think that you’d ever see the government proposing laws to limit your sodium intake? Did you *EVER* think that we’d see the country inching back on a vector toward Prohibition of Alcohol?Report

    • Avatar Michael Drew in reply to Jaybird says:

      We’re not on that vector, Jay. As the zealous commenter who bought into that premise pointed out above, if you prohibit, you can’t tax, and that’s the point. This is just about promoting healthy choices through incentives. You can be against that too, but it’s not on a vector toward prohibition. Unless an increase in the sales tax is on a vector toward buying and selling things.Report

      • Avatar Jaybird in reply to Michael Drew says:

        I don’t mind you trying to make me be a better person.

        I find it kind of touching.

        I will do what I can to make you be a better person, after all, so for me to resent you doing the same would be silly.

        I would just like you to quit using the full force of the law to make me be a better person as well as the threat of imprisonment.

        Could you please stop doing that? Thanks.Report

        • Avatar Michael Drew in reply to Jaybird says:

          I’m not trying to do any of that. I’m not proposing it, and I don’t care if it never gets enacted. I’m just saying there are good arguments for it. And those have nothing to do with trying to make you a better person, they have to do with what effect your behavior has on me (if it is the behavior in question) in combination with others who do the same thing. And that doesn’t depend on there being a public health care system. These costs get shared. It would be thrifty public policy to discourage excessive alcohol consumption, and we can do it by raising needed revenue. It’s not about you as a person.

          And the only way the threat of imprisonment comes into this is if you decide you have right to start stealing things because your six pack costs 75c more.Report

          • Avatar Jaybird in reply to Michael Drew says:

            There were good arguments for Temperance and Prohibition too.

            Surely you don’t support Irish people getting drunk and beating their wives, do you?

            Do you support drunken Irish men beating their wives?

            It’s a simple question.

            The problem is that the arguments against Prohibition turned out to be accurate and the arguments for it turned out to not take a lot of other things into consideration and these things resulted in “unintended consequences”.

            But let me ask you this: Let’s say that people start stealing things (beer, perhaps?) because the six pack costs 75c more.

            Will your first inclination be to say “maybe that was a bad idea and we should go back to the way we did it before” or will it be to say “we need to come down on these people, we, as a society, deserve to live in places where people don’t steal, certainly not drunkards, we need to double down”?Report

            • Avatar Michael Drew in reply to Jaybird says:

              Well okay, then we’ll just dump the whole process of argumentation over the best policies and move on to a different process. I don’t know what that’s going to be, but I’m sure you do.

              The thing is, I’m not asking you a simple question. I’m asking a rather complex question, namely, “What should the level of taxation on alcohol be?” And given that the level is already something considerably more than zero, I’d say that the scope of the unintended consequences are rather less than those at stake when we went from legal booze to totally prohibited booze. But there certainly could be unintended consequnces. The problem is, the law of unintended consequences if followed slavishly (actually I don’t really know what it pretends to advise) is ultimately an admonition to do nothing — no action whatsoever. I know your secret trump card is to claim that that is what you want, but there is no way for you to claim the rest of us should too. You’re the outlier on that one.

              If people start stealing things, my reaction won’t be any different than it is now — no need to crack down, but just enforce the law as per normal (with a generally lenient hand for minor offenses as I prefer); keep the tax where it is.Report

              • Avatar Jaybird in reply to Michael Drew says:

                The best policies remain “allow people to make their own moral decisions without having people like Doctor Dobson making them on others’ behalf.”

                Out of curiosity, where do you think that the Baptists and Bootleggers come down on this whole “sin” tax thing? (Remember Jack Abramoff’s lobbying on behalf of Dobson and casinos?)

                Does that give you *ANY* friggin’ pause *WHATSOEVER*???Report

              • Avatar Michael Drew in reply to Jaybird says:

                This is not a moral question, Jay. It’s just a question of costs incurred, and trying to lessen them through a measure that is not onerous, and leaves every single right in place that was there the moment before. I don’t care what the Baptists think — no. It gives me no pause *WHATSOEVER*.Report

              • Avatar Jaybird in reply to Michael Drew says:

                If you want people to not see it as a moral question, perhaps the use of the term “sin tax” is to be avoided at all possible cost.Report

              • Avatar Kyle in reply to Jaybird says:

                I was going to chime in here that I think Michael’s correct here w/r/t alcohol but that the hang up is in the popularized if anachronistic term sin tax.Report

  8. Avatar Francis says:

    ED, in general arguments from incredulity — “The reasoning behind this seems … more than a little absurd” — when aimed towards someone who’s widely considered an expert in the field (Kleiman’s a professor of public policy at UCLA and has published widely on these issues) say more about the person making the argument than they do about the person at whom they are aimed.

    You do not post a single shred of evidence that Kleiman is wrong about the social cost per can of beer. Now maybe he’s wrong, and even if he’s right maybe the societal cost to “community” from the loss of bars outweighs the societal benefit of more live teenagers. But you’ve got a loooong way to go to make a persuasive argument.

    At least when everyone carries health insurance, the argument that the state should impose sin taxes to recover the cost of uninsured care attributable to the taxed activity goes away. If sin taxes are a moral outrage to you, then you should support a mandate to carry health insurance.Report

  9. Avatar Joquhn Kaspein Moon says:

    Nice post E.D. One thing I might add is that while it is often assumed and marketed that sin taxes are imposed to lessen the use of unhealthy substances such as alcohol and tobacco that is an error in thinking. Rather sin taxes are imposed on products that have an inflexible demand curve because people will pay more for them. If these taxes actually cut the consumption of said products then what ever programs were the intended recipients would not receive the intended funding. An example would be that if everyone stopped buying legal tobacco then there would be no funding for the “State Children’s Health Insurance Plan.” Therefore the intent of the tax cannot be to stop unhealthy behavior but rather to fund programs which would otherwise have no annual income.
    Likewise both high taxation and prohibition create black markets and cause normally law abiding citizens to become criminals. This sort of living “outside the law’ might encourage people to question other laws moving them from black market consumers to black market entrepreneurs.Report

  10. Avatar Kyle says:

    As usual, interesting thoughts E.D.

    I agree with Nob’s points about recouping externalities via taxes. And because I generally prefer taxes to outright prohibitions, I have a hard time getting worked up about sin taxes at the conceptual level.

    That said, I do get worked up about casually made assumptions. Having turned 21 only a few years ago, I still have rather strong feelings about drinking laws and what not but McCarthy is right to point out that clamping down on beer, diverts would-be drinkers to more potent hard alcohol, which comes with a significantly increased health risk.

    People who would casually drink beer, maybe get buzzed but not consume to excess, because of tailgating restrictions on low-alcohol content beverages, would smuggle simply pregame with hard alcohol, smuggle in more, and then end up much more inebriated than planned and sometimes a danger to themselves and others. If this weren’t such a documented aspect of collegiate life, I’d say this falls under the law of unintended consequences but in this case, it’s pretty much guaranteed to happen so I’d label it an intended consequence.

    Yglesias-Kleiman assert, “Kleiman says that this would be a particularly effective way of controlling over-indulgence by teenagers (who, after all, barely have any money) and would allow us to get rid of the not-really-enforced minimum drinking age and eliminate the culture of fake IDs and casual law-breaking that it encourages.”

    The latter half I completely agree with but the first half is practically loony. Teenagers – in absolute dollars – have less money than working adults but they consume a much greater proportion of their income, which is why they’re a top demographic for the entertainment, apparel, and food and beverage industries. College students are generally referred to as a relatively poor demographic but they’re also a relatively drunk demographic too. So I think the price elasticity of demand for beer among the young is more elastic than presumed.Report

    • Avatar Michael Drew in reply to Kyle says:

      Is the proposal really just a tax on beer? That seems incredibly dumb? Even if all were increased, I do get Jaybird’s theoretical point that the savings get bigger for whiskey if the tax is increased equally by dollar for all forms (though I think that is going to be a pretty tiny effect). But with just a tax on beer, it seems like an outright encouragement, and the concern becomes very real. Is that really the proposal?Report

      • “Raise the tax on alcohol, especially beer. The average excise tax (Federal plus state) on a can of beer is about a dime. The average damage done by that can of beer to people other than its drinker is closer to a dollar.”

        The tax on a shot of whiskey served in a bar is probably less, but the cost I see no reason to be presumed less. He has nothing more to say in justification. Very odd — I see no reason not to raise the tax on all forms if one is going to do this.Report

        • Avatar Kyle in reply to Michael Drew says:

          I was working on my reply and didn’t see this one, but yeah, I think it’s rather odd to assert costs associated with beer drinking as distinct from other forms of alcohol consumption, hence the tax based on alcohol by volume.

          I should say I’m also not that unsympathetic to raising alcohol taxes because the markups are ridiculous and the competition so fierce. So I’m less concerned about the tax being passed onto consumers in this industry.Report

          • Avatar Michael Drew in reply to Kyle says:

            Well, I’m on record saying the main pointis the revenue, so I have to be okay with that (though I doubt you’re correct — in fact I’m not sure the tax isn’t rather directly applied to the consumer, but maybe even then price competition is so fierce it would chase up the production chain. Probably depends whether you’re in the microbrew or Keystone end of the market.), however because the externalities are so clear here, once the revenue need is satisfied — and to be clear, I’m not gunning for this; I’d also be okay with looking at other sources well before coming to this one, including various cuts all over the place — but once the need has been shown, I think to some extent, the incidence falling on the consumer is pretty defensible, because I think the public health & cost externality case is a pretty good one here.Report

      • Avatar Kyle in reply to Michael Drew says:

        I think Yglesias was just musing on the applicability and benefits of an alcohol tax generally – whereas Kleiman had a more comprehensive proposal that included raising alcohol taxes but “especially beer.”

        More troubling is his “deny alcohol to problem drinkers regime,” far more invasive than the under 21 prohibition though, acceptably logical.

        I mean, my opinion, I think if you’re going to tax it, it makes significantly more sense to tax based on the alcoholic content of the beverage. I also don’t think Kleiman’s proposal is going anywhere soon. Nob’s suggestion of taxing package/liquor store purchases but exempting social drinking isn’t a bad one, after all bars can cut you off.

        Though, I would imagine that would impact minority and immigrant owners of liquor stores rather negatively…which is often a concern in so called sin-taxes. Their externalities aren’t often priced into the product and disproportionately affect the under-privileged. But the local purveying of said foods, beverages, and products is often an avenue of entrepreneurial success for some of the same under-privileged.Report

        • Avatar Michael Drew in reply to Kyle says:

          The Bodega people will adapt, I’ll assure you of that. keep in mind, this is merely a proposed (probably modest, as that is all that would go through) increase of a tax that already exists.

          I think you’d want this to apply in bars, since that’s a lot of where you get your DUI injuries. But I would support returning part of the value of the tax back to the taverns if it became clear they were unable to pass the tax to the consumer through a general rise in prices.Report

          • Avatar Kyle in reply to Michael Drew says:

            To be fair, I’m not all that concerned about DUI injuries, we’re nearly to the point where cars can come equipped or be outfitted with devices meant to disable vehicles if the driver is drunk.

            I’d much rather use those and scrap the myriad of laws we have now because “someone somewhere might drive under the influence therefore we must treat everyone (21 and under) as a potential Hindenburg on wheels.”

            Indeed, drivers under the influence can be just as impaired if not less so than tired drivers yet we don’t have any comprehensive program focused on the real problem – which is impaired driving – than we do disproportionately attack one method of impairment and then consider it a successful public policy even if that remains questionable.Report

            • Avatar Michael Drew in reply to Kyle says:

              Wisconsin (where I live) got I thought really unfairly called out on the carpet by the NYT a year or so ago for drunk driving numbers and our supposedly lax laws (first time not a felony, etc.). I agree people overreact. But it kills and maims a lot of people. I wouldn’t hazard a guess, but it’s got to be a pretty major part of the cost we’re talking about, not to mention the heartache. And to be fair, we do rive drunk as skunks up here (not all the time, I mean, you can come visit. But we do it. ) The auto-key-taker development sounds very promising. Of course, if it were ever made a regulation, that would be grotesquely Orwellian/DPRKish… (it actually kind of would).Report

              • Avatar Kyle in reply to Michael Drew says:

                It actually is a regulation, at least here in California, if you’re convicted of a DUI you can be made to install (and pay for yourself) a device that does a breath analysis before starting engine.

                It’s obviously not foolproof, but that’s one method. I read awhile back that Toyota was working on software that would detect erratic driving and bring the car to a stop on the assumption of impairment. Precisely because driving is a licensed activity and voluntary at that, I guess i have fewer big brother qualms about a widespread implementation of software that would bring cars to a stop if operation drifted outside of certain norms. Still I think you’re right to recognize the concerns and costs. I just feel that the problem is bad/impaired drivers and frankly I think there’s a lot more we could do to address the problem that way than our current fixation on DUI’s. Another example I’ve found intriguing are subsidized cab fares between midnight and 2am or so.Report

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