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How Efficient are the Current U.S. Beer Taxes?

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  • Vinish SHRESTHA

    (Department of Economics, Towson University, Towson, USA.)

Abstract

This paper examines the status of current beer taxes in the U.S. by questioning how far away the present beer taxes are from the optimal taxes. Following the estimation of tax elasticity, I estimate the lifetime discounted costs that a heavy drinker levies on others through: 1) Years of life lost; 2) Social insurance system; 3) Drunk driving accidents; and 4) Forgone income taxes. The optimal level of beer tax ranges from 17.15 percent to 47.5 percent of the price per drink. Even the conservative estimates suggest that current beer taxes comprise only 16 percent of the external costs.

Suggested Citation

  • Vinish SHRESTHA, 2016. "How Efficient are the Current U.S. Beer Taxes?," Journal of Economics and Political Economy, EconSciences Journals, vol. 3(3), pages 446-470, September.
    • Handle: RePEc:cvv:journ1:v:3:y:2016:i:3:p:446-470
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    References listed on IDEAS

    as
    1. Orley Ashenfelter & Michael Greenstone, 2004. "Using Mandated Speed Limits to Measure the Value of a Statistical Life," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 226-267, February.
    2. Orley Ashenfelter & Michael Greenstone, 2002. "Using Mandated Speed Limits to Measure the Value of a Statistical Life," Working Papers 842, Princeton University, Department of Economics, Industrial Relations Section..
    3. Vinish Shrestha & Sara Markowitz, 2016. "The Pass-Through Of Beer Taxes To Prices: Evidence From State And Federal Tax Changes," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1946-1962, October.
    4. repec:fth:prinin:463 is not listed on IDEAS
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    More about this item

    Keywords

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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I10 - Health, Education, and Welfare - - Health - - - General

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