Revenues
Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
| Billions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2015-2019 | 2015-2024 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change in Revenues | 4.8 | 6.4 | 6.5 | 6.6 | 6.7 | 6.8 | 6.9 | 7.0 | 7.1 | 7.2 | 31.0 | 65.9 |
Source: Staff of the Joint Committee on Taxation.
Note: This option would take effect in January 2015. Estimates are relative to CBO’s April 2014 baseline projections. Because excise taxes reduce producers’ and consumers’ income, higher excise taxes would lead to reductions in revenues from income and payroll taxes. The estimates shown here reflect those reductions.
The federal government collects revenue from excise taxes on distilled spirits, beer, and wine. The different alcoholic beverages are taxed at different rates. This option would standardize the base on which the federal excise tax is applied by using the proof gallon as the measure with the tax levied at $16 per proof gallon for all alcoholic beverages. A tax of $16 per proof gallon would equal about 25 cents per ounce of alcohol. Under this option, the federal excise tax on a 750-milliliter bottle (commonly referred to as a fifth) of distilled spirits would rise from about $2.14 to $2.54. The tax on a six-pack of beer would jump from about 33 cents to 81 cents, and the tax on a 750-milliliter bottle of wine would increase by a similar amount, from about 21 cents to 70 cents.