President Obama recently gave a lengthy speech on inequality, poverty, and what to do about it. He claimed inequality is increasing, which is debatable, and then offered a few populist ways to reduce it, such as raising...
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- Wisconsin Prosecutors Misguided on Alcohol Taxes
Wisconsin Prosecutors Misguided on Alcohol Taxes
Prosecutors in Wisconsin are pressuring the state legislature to raise the state’s alcohol taxes by an unspecified amount. The plan, which has the support of the Wisconsin District Attorneys Association (WDAA), is to use the increased revenue to help pay for 121 more prosecutors and raise salaries to help slow job turnover among assistant district attorneys.
The argument that the WDAA uses to justify their plan is that “about 70% of the crime we see is related to alcohol.” This might be true, but it doesn’t mean that the solution is to increase the tax on alcohol. The question they need to ask themselves is "What is our ultimate goal?" Is it to reduce crime or to increase the number of prosecutors? If the goal is to reduce alcohol-related crimes then increasing the tax is not the best option. Tax Foundation Chief Economist Patrick Fleenor explains in a background paper on alcohol taxes:
The reason for this is quite simple: under a general excise tax hike, problem drinkers would still not be forced to bear all of the costs of their actions. Instead, the burden of these taxes would be borne by all drinkers, who constitute a large fraction of the U.S. population. Furthermore, research indicates that the drinking habits of heavy drinkers, who are responsible for much of the external costs of alcohol use, are largely unaffected by changes in price. Consequently, tax increases are not likely to significantly lower the harm done by irresponsible drinkers.
The majority of drinkers are responsible and law-abiding citizens who are no more at fault for alcohol-related crimes than are nondrinkers. Fleenor goes on to explain that the better strategy would be targeted policies aimed at actual offenders. These could include increasing fines and jail time for drunk driving and other alcohol-related crimes. These policies would help ensure that the people who are responsible for the crimes bear the full cost of their crimes.
If, on the other hand, the goal is simply to increase the number of prosecutors in order to bolster their justice system (as the WDAA is claiming), then increasing the alcohol tax is bad policy. Sound tax policy would dictate that Wisconsin fund its justice system with the state’s general revenue. The justice system is something all citizens benefit from and therefore all citizens should help pay for. If the state needs more prosecutors then the state should pay for them with general revenue raised through broad-based, economically neutral taxes, not revenue from taxes levied on a select subpopulation (in this case, drinkers).
Wisconsin needs to either increase the penalty for alcohol-related crimes, or increase broad-based taxes to pay for a more robust justice system; in either case, increasing alcohol taxes is not the right policy choice.
Read about similarly unsound policy proposals that are often proposed for cigarette taxes.
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