Proponents of prohibition argued that alcohol was the cause of many evils and thought the solution was to enact a ban on its sale. They succeeded in their efforts, but helped usher in more evils, such as laying the financial foundation for organized crime in America. While they were right about the evils of alcohol, they were wrong about their solution.
The impact of alcohol has been studied extensively and the results of these studies back up the intuitive view that alcohol contributes to the frequency and severity of violence, especially domestic violence. It is also linked to child abuse and suicide. And, obviously enough, to drunk driving. While there is neither a necessary nor sufficient link between alcohol and violence, it does have a significant causal connection. As such, reducing alcohol consumption would reduce these harms, making a solid utilitarian moral foundation for doing so. Since prohibition is out and individual efforts are obviously limited to individuals, something with broad reach is needed to have a broad impact on the problem.
While few people would argue for prohibition, there is some support for fighting the harmful consequences of alcohol by raising the taxes on it. Intuitively, increasing the cost of a product will tend to reduce its consumption—but intuitions can be wrong. However, a large number of studies establish a link between raising alcohol taxes and reducing consumption. This, in turn, helped reduce violence. It also had other interesting effects, such as reducing the number of gonorrhea cases (which also matches the intuition that people are more likely to make poor decisions about sex when they are drunk). Raising taxes (and thus prices) is also supposed to help reduce teen drinking, thus lowering the chances that they will grow up to become heavy drinkers. These all seem to be significant benefits which can be employed in a utilitarian argument in support of the claim that raising alcohol taxes is the morally right thing to do. Naturally, the possible negative consequences must also be considered.
One point of concern is that if taxes are raised on alcohol, people will turn to more dangerous alternatives such as other drugs and “boot leg” alcohol. While some do claim that people do not turn to more dangerous alternatives, this is a matter that must be weighed when making the consideration. Even if some people did turn to more dangerous alternatives, the effect of the tax could still be positive overall in terms of reducing the amount of harm. However, if the consequences of the tax were worse than not having the tax increase, then it would be wrong. This is, of course, an empirical matter that requires evidence to resolve.
As with any tax on a commonly used product, there is the concern that it will disproportionally impact people with lower income. This concern has two main moral components. The first is that such a tax would be unfair because of this disproportionality. In this it does not differ from other sales taxes—while everyone pays the same rate, it is a higher percentage of the income of the less well off. The second is that the higher cost would hurt the less well off—they would keep buying alcohol but would suffer more of a financial burden and this could lead to more problems. This is also an empirical matter: if less well-off people spent the same as before and thus drank less, then the overall impact would be positive (assuming the claimed benefits of less alcohol consumption).
There is also the ideological opposition to increasing taxes, even for good consequences. In this case, it could be contended that the utilitarian argument should yield in favor to the moral concern about raising taxes. That is, that increasing taxes is simply wrong, even to create good results. While there are some whose opposition to taxes is absolute, this position is uncommon. After all, it is difficult to argue that it is better to not raise taxes and tolerate the serious harms, then to raise the taxes to create significant benefits.
One last concern I will consider is the opposition to the “nanny state.” The idea is that people should be responsible for their own choices and the state should not be a “nanny” that regulates behavior. One obvious response is that while raising taxes can influence people’s choices, it does not compel them to do something nor forbid them. That is, they are still free to make decisions about drinking; it will simply cost them more to drink. It could be objected that the state is still trying to influence behavior in a desired direction. This, of course, cannot be denied. But this is what states, by their very nature, do. For example, states impose penalties for things like murder, theft, and invading with the intent of influencing behavior. While anarchists are, of course, opposed to states doing these things, those who accept the state must also accept that influencing behavior through penalties and imposed costs is what states do. As such, the state trying to reduce alcohol related deaths by raising taxes is as justified as the state trying to reduce murders or illegal border crossings by imposing penalties on those behaviors. As such, increasing alcohol taxes would appear to be the right thing to do.
Long time reader, first time commenter. Another thing that should be considered when deciding to tax “dangerous” things (particularly when said things are addictive substances) is where the tax money goes. If something causes societal harm and it is decided to tax it in order to decrease that harm, than perhaps earmarking the funds to ameliorate the harm is a better choice. Cigarette taxes come to mind. The poor, under-educated, and minorities are more likely to smoke. Taxes can be as high as $.25 per cigarette (even higher in some jurisdictions). When this money is used to offset general budget shortfalls, it is clearly an unfair burden on addicted (generally) poor individuals. If the funds are used for smoking cessation classes, healthcare for smokers, or inventing and marketing a safer delivery mechanism for nicotine, then those taxes are much more just and fair. The same arguments apply to your example of alcohol (also an addictive substance).
It’s like we learned nothing from our failed war on drugs.
Somewhere, Nancy Reagan is smiling.
I propose a topic: “What are the ethical responsibilities of disseminating opinion and information on public channels?” Do people who opine in public have any duty of care to transparency or accuracy?
I suspect that the linked article in Scientific American, and a million like it across the Internet, is why so many people don’t care whether President Trump is speaking factual truth or whatever first comes into his head on any given subject. We no longer expect anyone to take responsibility for what they say in political or policy areas: Trump just uses the freedom from fact more skilfully.
As you note, the justification for a tax increase hinges in empirical questions. In public debate, the common response to this kind of article on a policy issue is not a careful analysis of the points, a picking apart of the inaccuracies, overclaims, distortions, and downright contradiction of the sources of evidence claimed. The usual response is a blast from a different direction, using different data sources and criteria, emphasising different considerations. Pundits can keep this up all day, citing “studies” that they can be pretty sure few are ever going to read, think about, consider methodology, data selection, bias in sample, p-values. “For every Ph.D., there’s an equal and opposite Ph.D.” When everyone gets tired of duelling studies, of course, there’s always the reliable option of insults and tribalism.
Of course, it’s also common to ignore the article altogether, and turn the conversation to some other issue. That has been working for politicians for centuries. It does at least have the virtue of not further polluting public discourse on that issue with more lies and half-truths.
I’ve been trying to trace solid information on this for two hours now. I have 20 or so browser tabs open. I can’t pretend I’m anywhere near a point at which I could say anything substantive about the central question: what would the effect of increased taxes be on responsible and on binge drinkers, affluent and impoverished? Even if I took the information in front of me on trust, I certainly wouldn’t take it upon myself to advocate for any specific policy. At this point I find the approach in the article “A new scale of the U.S. alcohol policy environment and its relationship to binge drinking” by Naimi et. al. PubMed 24355666 the most potentially interesting, but in another hour I might have found refutations.
The data in most of the papers I looked at is derived from the CDC BRFSS, a voluntary phone poll in which people self-report their own behaviour. The CDC acknowledge the obvious limitations of this approach, and I find it interesting that nowhere can I find a paper which cross-checks the demographic, commercial, and behavioural numbers here against other known databases. To their great credit, CDC provide easily accessible data. I was half-tempted to check the consistency of average income brackets by state with official information, but I don’t feel it worth my time.
Interestingly, Naimi et. al. PubMed 24355666 has the same main author as one of the citations in Dr. Sobowale’s original blog article, linked below. I came to it through a different set of searches. I found that unsurprising. I expect that publications in any specialist niche of the science and policy interface will be dominated by 50 or 100 people who reliably produce papers that appeal to the target market. As usual, the acknowledgements section was enlightening, and I traced that one back to the policy priorities displayed by RFAs. That doesn’t mean that anything about the work is inferior, of course, but it does illustrate the publication bias.
Along the way I found that the original linked article in Scientific American gives no references for its statements at all. However, it does say at the bottom that it is a version of a previous article. On tracking that, I found a much better version of the article with links to the sources cited. This was a very minimum due diligence for me to justify a comment. I will use my one link on this, in case anyone else wants to map the rabbit hole: https://blogs.scientificamerican.com/guest-blog/we-must-raise-alcohol-taxes/
We should therefore properly attribute the removal of source citations to the editor rather than the author.
Interestingly, in the blog version, the comment “Common arguments against taxing alcohol include that it disproportionately affects poor people, This has been disproved” includes a citation to “Who Would Pay for State Alcohol Tax Increases in the United States?”, again led by Dr Naimi. Disproved? In this paper, nothing at all is either proved or disproved. It is purely a numbers model with assumptions, in which the limitations paragraph explicitly lays out that because there has been “no systematic review or meta-analysis of tax elasticities on the basis of [income, habits]” the elasticity across all levels of habit and income was assumed constant. I think we can assume that constant elasticity across income levels is vanishingly unlikely.
I’m not very smart. Even after years, I waste time chasing these misrepresentations and overclaims down. Most people have wised up by now, and just assume from the start that every advocacy article from every author on every source is built on this kind of sand.
Is it any wonder that Trump’s credibility seems no worse than the rest?
Welcome to the club. Are you familiar with H. L. Mencken’s Bathtub hoax?
No, I hadn’t seen that one, so thank you for the reference. I have a fondness for honest hoaxes.
However, no-one has used that false factoid to write op-eds or policy papers arguing that people whould be forbidden to have bathtubs, or to impose a Shower Tax.
A single fact can more easily be debunked. I really get exasperated at the process by which subprime statistics get laundered, repackaged as “studies”, repeated by people who don’t check – who don’t want to check – the soundness of the data and methods, and who misrepresent each previous level, glossing over the inconveniences for their bias and highlighting the facets that feed it. It takes hours or days of work just to peel back the layers, separating fact from statistic from opinion from lie, even when data is actually made available.
What’s the point of trying to think about something when you don’t understand what you’re thinking about?
Now, having said all this, I think from the little I’ve read that it’s plausible that taxation might play a role in a comprehensive set of measures that could have some benefit to curb binge drinking and problems arising from that. I would call it “suggestive” rather than “convincing”. But it seems pretty clear that taxation alone is not a good answer, and the statistics are not solid enough to support the conclusions stated, and it is a lie to present them that way. Of course, for people who believe it’s always good to take money from people and give it to the state, no further justification for more tax is ever needed.
Most definitely agree. Been down similar rabbit holes on many occasions. What I found amusing about the Mencken thing (was once a big fan, more moderated in my enthusiasm now however) was that attempts by Mencken to put a stop to it all by outing himself were unsuccessful. If even something as simple as that gets generational legs, does it amaze you that things with a little “science” behind them multiply like rabbits? What amuses me is when a study is based on another study which itself was based on another study, the probabilities of each being somewhere south of 1.0, how rapidly the quality of the top most study deteriorates. And when any one of those studies involves human behavior, especially self-reported human behavior, you have little more than superstition on your hands. And these are the very kinds of “studies” from which many macro economic conclusions are drawn.
Are you also familiar with the Gell-Mann Amnesia Effect?
I remember reading about the speech, but not, oddly, that he named it for Gell-Mann to try to hitch on the name. “You don’t have to be right, any more. Nobody remembers.” By 2002, it was already old news to me though. I had learned it from an incident in my youth, when national reports about a local crime had got just about all the specifics wrong. And, as someone who knew a little about some areas of computing and what we would now call cybersecurity, I didn’t even bother reading popular articles about them. There are not enough facepalms.
News outlets will continue doing it, though, because it’s a lot faster and cheaper, until we start calling them on it, and punish them by withholding our subscriptions, our clicks, our eyeballs. And we don’t call them on it.
Cyber security, eh? Know any good cyber security experts who might consider working out of central Florida for a startup company? We just lost ours to stress/PTSD/personality overload.
‘Fraid not. I’m not a specialist, and the people I know are settled in corporate Europe. Just avoid anyone the Clintons, the DNC, and the Congressional Democrats used and you should be fine. 🙂
Joking aside, it’s not easy to attract someone who really knows the fundamentals, has a good terperament for the job, will also fit well with a given company, and has any intention of staying. I wish you luck!
In general, I am very wary of the use of the tax code to accomplish anything other than to raise revenue for Constitutionally mandated or congressionally approved initiatives. Raising money for federal highways, to support the post office, to fund the military – even in this day and age to fund social programs like Social Security or Welfare are part of an approved budget that require funding. I do have some serious objections to many of the approved budget items, but that’s a different matter- taxation, in my view, is to raise revenue for government operations, not to regulate the morality or behavior of citizens.
One exception that I do find acceptable is when the tax code is used to guide,or “nudge” economic activity. The deductibility of mortgage interest, for example, helps to stimulate bank lending, and increases individual home ownership which cascades throughout various construction, retail,and service industries related to home ownership and has a stimulative effect on the economy. There are many examples of this kind of economic activity that are affected by taxation – tax free state & municipal bonds, for example, or IRA/retirement accounts, or the tax treatment of the equity in life insurance. Even “bailouts”, although I fundamentally oppose them, might fall into this category. The point, which makes it acceptable to me, is that it is about driving economic sectors, and to a large extent, the general health of the economy is the responsibility of the government.
At the risk of going off topic, I’ll just mention here that the loan forgiveness of companies like Solyndra exceed the parameters of what I find acceptable – those activities are ideologically and politically motivated and have no basis in economic theory other than to try to defy it.
I have two specific objections to the idea of taxing alcohol for the purposes you describe. One is practical, the other is moral.
From a practical point of view, basic common sense tells me that this will not work. Alcohol consumption is widespread in this country – and like other behaviors we have talked about (gun usage, drug use, gambling, gaming) there are many, if not most, consumers who make rational lifestyle choices based on a number of factors as to how, when, and to what extent to include alcohol in their lives. The factors can include health, finance, work, and others. Some may decide not to drink during the week, others may limit themselves to one or two drinks per week. Still others may even binge-drink on weekends, but do it at home or with a designated driver. Cost for these people is also a factor – some may drink less because they prefer fine whiskey and would rather save their money for special occasions. I do that – I prefer craft IPAs which are more expensive than Budweiser – so I drink less frequently, preferring to stick to the better stuff, entirely based on cost.
There are other consumers who do not have this kind of control. By many accounts, and painted with a broad brush, these people suffer from some level of alcoholism – where the need or desire for alcohol often overrides rational decision making. For them, maintaining their habit is relatively high on their list of priorities, and they will make other lifestyle adjustments in order to do so. These are the people I used to see in the local liquor store in NJ on Fridays – going to the supermarket and buying all their food with EBT cards so they could save their cash for beer and pints.
It is by definition, and self-evident that the people for whom alcohol is a problem who are more prone to alcohol-driven violence, and it is these people who will not be affected by a tax. The other group will make lifestyle adjustments to absorb or avoid the extra cost, but the problem drinkers will find ways to continue in their behaviors. They will certainly be affected by the tax, but that effect will be a negative one on aspects of their lives that may in fact be working.
On a moral basis, it has been well established that alcoholism is an addiction, a disease. It is medically recognized and treatments are FDA approved and usually covered by insurance. Taxing alcohol is tantamount to the government exploiting sick people under the guise of “helping” them, and enjoying a fat revenue stream as a result. On the other side of that, it has been shown in peer-reviewed studies that moderate alcohol consumption is actually a health benefit to most people – and by increasing the tax on a healthy behavior the government is actually harming both kinds of consumer.
This is true of other so-called “sin” taxes as well. High taxation of cigarettes and gambling for example, were first introduced as deterrents – but the truly committed still find ways to feed their habits. Further, subsequent to the introduction of these taxes, both smoking and gambling have been recognized as true addictive behaviors – obviating the “deterrent” aspect of the tax and turning it into nothing short of exploitation.
It can be argued that the high tax on tobacco has, in fact, contributed to a reduction in its use – but this is difficult to prove because there have been so many parallel approaches to that end. I know of no studies that can point to cost as a primary or even major factor in smoking cessation across a wide study group. One thing that it has done, that absolutely can be proven, is that it has created a sizeable revenue stream for Native American tribes.
If we approve the idea of taxation as a means to alter behavior, we must consider who gets to define “destructive” behavior, and at what point this destructive behavior warrants government intervention. One of your recent posts was about gaming as a legitimate addiction – so to the extent that gaming has “taken over” the minds and behaviors of some individuals, do you think the government should intervene and levy a tax on computer games as a means of “helping” those poor denizens of the maternal cellar?
Behavior, of course, is often derived of thought – it is not a huge leap to link bad or destructive behavior to bad thought. You did this yourself in your following essay, by talking about Trump’s (and by extension, Republican) attitudes toward environmental and regulatory attitudes. Is it possible, then, for the government to exercise some kind of punitive fiscal action against what they believe to be destructive ideas that will lead to destructive behavior?
This in itself has both Nazi and Orwellian overtones – but not only is it possible, it has happened. Was this an ideologically based attack, or was it merely the illegal use of a powerful weapon in the service of winning at all costs?
Before I get too far afield, I will return to my original premise – that taxation should be limited in scope and used for its intended purpose only when absolutely necessary. I have very strong objections to the protestations about tax “fairness” when it comes to “fair share” – because the actual needs for the revenue in the first place become secondary. It becomes a foregone conclusion that the government is going to take our money – and the issue of “how much” is predicated not on revenue needs but on ideas like “He has too much”.
Tell me what you need and what you need it for – let my representatives vote for or against it and if it passes, I will grudgingly pay for it. Do not take my money to try to regulate people’s behavior in some misguided belief you are going to “help” them by doing so. And certainly do not use the all-too-powerful tax code to exploit individuals who have been determined to be sick.
Short on time, will read the rest later but in regards to using taxes to “nudge” economic activity, I completely disagree. I definitely understand the temptation and used to agree with doing so myself. But my first and foremost objection is that taxation, however applied, is eventually distributed among various producers and consumers related to that activity/entity being taxed. This plays into the law of unintended consequences that are generally not humanly perceptible. Put a tax on X and much of that tax gets paid by consumers when the producers eventually raise prices to cover this new cost. To what degree they pass it along or to what degree they absorb it themselves has much to do with numerous other factors, not limited to but most prominently the elasticity of demand for their product….and to some degree the elasticity of supply of the raw materials and/or labor involved in creating their product. And this applies equally, but in the opposite direction, to “alleviating” taxes on specific economic entities. Except that without an approximate cut in spending, the tax on the economy simply gets absorbed elsewhere. Yes, the Laffer Curve does apply but not to the degree that many “conservatives” attribute to it.*
The problem with government and its impact on the economy is not tied to taxes. It is ALL about the spending.
Hopefully that is somewhat clear and I’d like to take more time with this but gotta run.
*Note, the recent Trump tax cuts would be something of an exemption as the cut in taxes was (back of the envelope) fairly balanced by the marginally lower taxes being applied to the repatriated funds brought in from outside the US.
I am on the fence on this issue. I don’t think the mortgage interest deduction is good policy, but I am in favor of 401k plans.
WTP – as usual, you bring up very good points that I cannot disagree with. In thinking more about my acceptance of taxation to nudge the economy, and as I mentioned in my answer to TJB, most, if not all, of the “nudges” I’m talking about are the kind of exemptions you indicate in your *Note.
The mortgage interest exemption stimulates the economy in many ways, as does the low capital gains tax rate. The capital gains tax reduction is a great example of what I’m talking about – adjusting the rate downward increases activity in the market, and spreading that lower rate among more transactions results in greater revenue than taking a higher rate from fewer transactions- and that’s just the direct result. The effect this has on businesses and individuals is to free up additional capital that in turn gets put back into the economy in hundreds of different ways. Leftists want to use the tax code for non-economic purposes, like “Fairness”, which is what I fundamentally object to.
“…taxation, however applied, is eventually distributed among various producers and consumers related to that activity/entity being taxed.
Very true – and the “law of unintended consequence” will get ya every time. I think that when taxes are increased to try to manipulate the economy, the consequences are usually negative – but when they are decreased to provide incentives, the incentives are opportunities that can be beneficial.
Caution must prevail, though. I brought up the issue of the breaks given to Solyndra and other solar companies – these were not “economic incentives”, they were individual exemptions given to specific companies to satisfy ideological and political goals.
Well, the point is that it’s economic, not behavioral. We can disagree on these points. On further consideration, I think my acceptance of this kind of “guidance” mostly falls into the category of tax relaxation to incentive certain kinds of activity. I can’t think of a case where I agree with additional taxes to discourage other kinds of activity.
Anyway, this discussion is secondary to the issue of using the tax code for purposes of behavioral change, or to promote ideological ends.
Anyway, this discussion is secondary to the issue of using the tax code for purposes of behavioral change
True, and now that I’ve had time to read the rest of your post, I agree. Given that I firmly believe that the less involvement of meddling outside forces in human economic behavior that better, I do not believe that these sorts of sin taxes, as attractive as they may be, are good for society as a whole. One major objection is that they can be used to do things that are otherwise unpalatable to the general public. No, no, no, we’re not prohibitionists! We all know how wrong that would be! We just wanna prohibit just a little bit by making it more of a burden to purchase it. The consequences are effectively the same. Never considering the likely rise in home brew, in tax avoidance, in smuggling liquor, etc. in proportion to the rise in taxes on alcohol relative to the ease of getting around the law. Hell, you can still find illegal moonshine (and not the stuff you see in tourist shops, stuff from real illegal stills) up in the Appalachian mountains. And elsewhere, I’m sure. Partly hobbyists and anti-government fanatics but also because it is economically viable for selling cheaply to local drunks and fools. Again, the law of unintended consequences will ultimately rule the day. And yet another consequence that gets glossed over/ignored by the likes of Mike and those who try to push these nanny-state ideas is that even more pressure would be put on our law enforcement officers, court systems, public defenders, etc. such that other more important crimes will get lost in that now even more greatly expanded nebulous domain.
Here’s the thing. If you want to address behavior problems related to alcohol consumption, why not address the behavior itself? Why throw a tax on ALL alcohol consumers in an attempt to control a small slice of those consumers that are a problem? How is this fair to the people who consume alcohol responsibly? I mean, if one is obsessed with the admittedly unreachable ideal of “fairness”, how does introducing yet another unfair practice help make things more “fair”?
Popcorn Sutton would agree.
In general I agree that the tax code shouldn’t be used for social engineering. Mike’s proposed tax on alcohol reminds me of the NYC tax on large sodas.