Working Paper: NBER ID: w3200
Authors: Henry Saffer
Abstract: Several public health interest groups in the United States have recently called for equalization of the federal tax on a unit of alcohol in beer, in wine and in spirits. This paper provides some new empirical evidence of what effect alcohol tax differentials have on total alcohol consumption. The data indicate that the greatest decrease in alcohol consumption results from an increase in spirits taxes, followed by beer taxes and then wine taxes. This suggests that the existing generally accepted taxation policy of placing the highest tax on spirits, a lower tax on beer, and the lowest tax on wine, results in the greatest reduction in total alcohol consumption.
Keywords: Alcohol consumption; Tax differentials; Public health
JEL Codes: I18; H25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| spirits tax (H29) | total alcohol consumption (L66) |
| beer tax (H29) | total alcohol consumption (L66) |
| wine tax (H29) | total alcohol consumption (L66) |
| spirits tax (H29) | own-price effect (E31) |
| beer tax (H29) | own-price effect (E31) |
| wine tax (H29) | own-price effect (E31) |
| tax changes (H26) | cross-price effects (F16) |