Center for Disease Dynamics, Economics & Policy

Although excise taxes on beer, wine, and spirits raise about $15 billion a year in revenue for federal and state governments, current alcohol tax rates in the United States are low by historical standards. In 1980, alcohol taxes represented about 22 percent of the pre-tax price of alcohol, whereas now, with the failure to raise nominal rates in line with inflation, they have fallen to about 10 percent of the pre-tax price (see Figure 1). Are current alcohol tax levels about right, or should they be increased?