The Drake's Take

What the real Joe Sixpack thinks of Wyoming’s beer tax

By Kerry Drake
— October 1, 2013

The beer industry is, not surprisingly, hopping mad about a proposal to raise the state tax on its product in Wyoming.

“The reality is that if the tax goes up, the price just gets raised and Joe Sixpack pays the price,” beer wholesaler Pat Higgins, owner of Orrison Distributing Co. in Cheyenne, told Joan Barron of the Casper Star-Tribune. He testified against the proposed tax hike at a recent Joint Revenue Committee meeting in Buffalo.

But I’ve actually talked to Joe Sixpack, and you know what? He says he doesn’t think any beer drinkers like himself should mind paying more in tax than the incredibly low 2 cents per gallon that the state has charged since 1935, when beer sold for $2.50 per case, or about a dime per can. The tax still amounts to just fractions of a penny per glass or bottle.

Kerry Drake

Kerry Drake

“Two cents a gallon? That’s absurd,” said Sixpack, whose real name is Don Russell, who has one of the best jobs in all of journalism. He writes a beer column for the Philadelphia Daily News that is nationally syndicated under the nom de plume Joe Sixpack. The name was his wife’s idea.

It’s not that Russell is a fan of tax increases. “Everybody objects to paying more taxes, no matter what,” he said. “A beer tax is a fairly regressive tax, because it’s [paid by] everybody at the same rate, regardless of their wealth.

“But it’s not an issue to me of whether beer drinkers can afford a few cents more per gallon or glass,” he added. “If that’s going to break your bank, you might want to re-examine your family finances.”

I agree. I don’t see the need for the state’s beer tax to be as high as Alaska’s, which tops the nation at $1.07 per gallon. But getting closer to the 28 cent per gallon national average seems reasonable, and the state could always use more money for the purpose that the beer tax is collected now: funding treatment centers for alcoholics, to the tune of about $265,000 per year.

The committee turned down two proposals to raise the state beer tax. The co-chairman, Sen. Ray Peterson (R-Cowley), said he will sponsor a bill to raise the tax to 4.5 cents per liter, or about 18 cents per gallon. It breaks down to about 1.6 cents per 12-ounce can.

Peterson said the state’s total tax revenue from all alcohol sales is about $1.7 million. A Wyoming Survey and Analysis Center report last year found that the state pays $27.6 million a year in direct costs from alcohol abuse. The indirect costs were estimated at $843 million.

“We seem to be a little short with the intake vs. the outgoing,” the senator said. “In short, we seem to subsidize our good drinking friends. … I don’t think it’s right that we expect the state to pick up 94 percent of the direct costs involved with treatment centers, rehab programs, law enforcement, emergency response teams, court costs, jail costs and all of the other programs aimed at assisting those that abuse alcohol.”

Unbelievably, though, some legislators think even collecting $265,000 a year from the beer tax is unnecessary. The panel’s other co-chairman, Rep. Mike Madden (R-Buffalo) told Barron that collection costs may be so high that the revenue doesn’t even warrant the price of collecting it. Fortunately, the committee also rejected an attempt to completely eliminate the beer tax.

Other backers of the measure portrayed the beer tax as a burden to the state’s microbreweries. They also said a hike would have a negative impact on related businesses, such as bars and restaurants, which could see customers buying cheaper beer or entrees or (horrors!) even skipping appetizers.

But how much would they actually have to raise their prices to cover the cost of increasing the beer tax? Barron reported that the current tax amounts to .18 cents on a 12-ounce bottle of beer that costs $3. Even quadrupled, which would be the rate Russell’s home state of Pennsylvania charges, it would still only be .72 cents per bottle.

Another contention of the no-tax crowd was that Wyoming beer drinkers will travel out-of-state to buy their brews. Really? With the high cost of gas, people will drive a long way to save a few pennies on beer? Not the smart ones.

Riverton Mayor Ron Warpness made what I consider to be the best argument in favor of raising the beer tax. According to the Sheridan Press, he told lawmakers in Buffalo, “In my community, we have people who are dying from the abuse of alcohol. I feel that the industry that helps contribute to the problem should help pay for it.

“The beer industry has received basically a free ride since 1935,” Warpness added. “It’s time they start paying for that ride.”

Wyoming’s 78-year-old state tax on beer is the lowest in the nation. Russell said the other four states with extremely low rates — Missouri, Wisconsin, Pennsylvania and Colorado — all have major breweries. Wyoming, of course, does not — but it does have a universal anti-tax mindset.

“Any penny you can knock off (the tax), the industry says is a help,” Russell said. “An increase may have some impact on small brewers, but really they just end up passing along those costs to consumers anyway.”

“Here in Philadelphia, we actually have a 10 percent tax on every drink served in a bar,” Russell noted. “If you pay $5 for a glass of good beer, 50 cents is tacked right on top of it.” He explained it’s a local tax that is used to help schools.

He said it’s hard to argue against taxes that are used for good causes like education or, as in the case of Wyoming’s beer tax, treating alcoholics. “How can you be against that?” he said.

If the beer industry is to succeed in lowering its taxes — or at least preventing any increases — it can make a better case at the federal level, where Russell said beer is taxed at a much higher rate. The Beer Institute, an industry trade group, estimates that about 45 percent of the retail cost of beer consists of federal, state and local taxes.

Government figures show that the federal tax on beer is $18 per 31-gallon barrel — about 58 cents a gallon or 5 cents per 12-ounce can. The tax is reduced to $7 per barrel or 2 cents a can for microbreweries.

The Center for Science in the Public Interest has proposed raising the federal excise tax on beer, wine and distilled spirits to help reduce the national deficit. According to the center, the increased rates would adjust for inflation and equalize the rates applicable to beer, wine and distilled spirits based on the percentage of alcohol in each product.

But Beer Institute President Joe McClain warned that for large brewers producing more than 2 million gallons of beer annually, the federal excise tax would double. For small brewers, he added, the rate could be as much as eight times higher than it is now.

The proposed federal tax increase on beer hasn’t gained much traction. Meanwhile, the Beer Institute and other industry groups are lobbying for the Brewers Excise and Economic Relief Act of 2013, or BEER Act, which would reduce the federal excise tax on beer and also protect brewers from future tax hikes.

Russell has been closely monitoring both the federal and state tax issues. He’s never been to Wyoming, and when I told him that the state has about 570,000 residents, he was incredulous. “There’s more people than that in my neighborhood!” he said, but later scaled down the population estimate in his section of Philadelphia to about 100,000.

The columnist said he’d like to visit Wyoming, especially after he was informed that it’s a good place to bike in warm weather, since that’s one of his other passions besides beer. So if you’re traveling in the state next summer, that guy you spot standing by his bike with a brew in his hand may not be just the average Joe Sixpack, but the famous one.

“That 2 cents is unbelievable,” Russell said as we concluded our telephone conversation. “It’s hard to believe Wyoming beer drinkers get away with that.”

— Veteran Wyoming journalist Kerry Drake is the editor-in-chief of The Casper Citizen, a nonprofit, online community newspaper. It can be viewed at www.caspercitizen.com.

— Columns are the signed perspective of the author, and do not necessarily reflect the views of WyoFile’s staff, board of directors or its supporters. WyoFile welcomes guest columns and op-ed pieces from all points of view. If you’d like to write a guest column for WyoFile, please contact WyoFile editor-in-chief Dustin Bleizeffer at dustin@wyofile.com.

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Published on October 1, 2013

{ 4 comments }

gwarnock October 2, 2013 at 7:29 pm

rbd: “The liberal tax and spend mentality does not work. Never has, never will.”

OK, we will go to war, costing the U.S. TRILIONS (off the books, until a Democrat takes office and puts the cost back on the books) and blame them,, nice spin,,

DeweyV October 2, 2013 at 9:16 am

The backlash to raising the Wyoming wholesale beer tax from 0.2 cents per can or bottle to a whole penny per can or bottle is a hurricane in a beer stein. I have never seen so much outcry over so little tax, ever. A while back I attended an outdoor event here in Cody sponsored by a nonprofit where a bottle of beer cost $ 6.00 per. The tax on that bottle was 0.2 cents , same as the $ 3.00 Budweiser downtown. The tax is statistically closer to zero than anything significant, yet the beer warriors are up in arms over this massive government tax increase that will destroy their placid pursuit of life liberty and happiness, or something like that . the End of Civilization as they know it.

Maybe they are trying to take our eyes off the beer ball. A few years back i vacationed in Hawaii. Flew into Honolulu in August , and it was hot and humid, so I felt a 6-pack of cold beer was in order as I set out to circumnavigate Oahu in my rented Buick. I dropped into the first convenience store I found and bought six cans of Bud that had been barged over from the mainland, for a retail price of $ 1.85 total. the beer tax in Hawaii is 90 cents per gallon ( second highest after Alaska’s $ 1.07) , so the tax on each can was 9 cents roughly ( a 12 ounce can is very close to 1/10th of a 128 ounce gallon ). Therefore, I paid Hawaii 54 cents in tax on a $ 1.85 purchase for beer imported at great shipping cost.

Back home in Cody , the very least I could buy that same 6-pack of canned Bud for was $ 3.00, upon which I paid a whopping 1.125 cents in state tax. I would have to buy eight 6-packs of the stuff in Cody in order for the State of Wyoming to net one thin dime in tax. Can you see the disparity I am pointing my pitchfork and torch towards here? That 6-pack of Bud I bought in Cody traveled a whopping 360 miles on good road in a semi truck from Fort Collins CO , rather than being barged 2400 miles over open ocean from California.

What, then, explains the huge disparity between the Hawiian and Wyoming prices for the same beer product? The Wholesaler, that’s what , and who, but why is my judgment call… GREED at the warehouse / distributor level.

Cody is renowned in the region for its high gasoline prices. Truth be told from a lifelong native resident, there is an unspoken ” premium surcharge” for darn near everything sold in Cody from real estate to beer, compared to nearby communities. The extra prices you pay for the privilege of living in Cody . Gouge.

Yes, I’ve got my pitchfork amnd torch ready to go. And a brush and tar bucket as well. But I ain’t gonna be storming the Bastille in Cheyenne. I’ll just tell my reps to do their best to raise the wholesale beer tax to 30c ents a gallon and yes by all means put a lot of that fee towards funding drunk wrangling and treatment. I also want a dime of it to go into the state highway fund alongside the dime increase in fuel tax.

My pitchfork and torch , brush and tar will be directed towards the beer wholesaler’s warehouse across the river… that’s where the outrage and impact to society from an increase for any reason in beer prices belongs.

Richard Garrett October 1, 2013 at 9:54 am

@rbd Please consider what Riverton Mayor Ron Warpness reportedly said — “In my community, we have people who are dying from the abuse of alcohol. I feel that the industry that helps contribute to the problem should help pay for it.” Alcoholism is a disease, one that needs treatment; it seems reasonable to me that if a higher tax is devoted to treatment its one everyone should be willing — even eager — to pay. I know I am.

rbd October 1, 2013 at 8:19 am

The underlying point is the of the rejection of the beer tax is the people that actually pay taxes in this country are tired of being nickel and dimed to death by all of the various fees, surcharges and other “taxes” imposed by the various governmental agencies in this state and country. Sure, 2 cents for the beer tax, another 10 cents for fuel……..just a little more…..and pretty soon it adds up to real money. Sure, the tax is low compared to other states, but what makes other states right? Then you tack on the costs associated with businesses having to comply with all of the paperwork and reporting requirements imposed on the business community and you have yet another hidden tax imposed on society. It’s not republican vs democrat issue, it is an issue of entitlement vs working for what you have. An increase in taxes will not solve the underlying problems in this country, only more burden, only more government trying to solve problems by spending our hard earned money.

Wyoming is one of the last great places, somewhat unburdened by the tax and spend mentality of the liberal side of the fence. Look at all the fees, surcharges, rules and regulations you have in California – and the People’s Republic of Kalifornia is in far worse shape than Wyoming ever will be. The liberal tax and spend mentality does not work. Never has, never will.

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