Happy National Beer Day!
National Beer Day falls on April 7 and commemorates the day that beer was once again allowed to be legally manufactured and sold following a long, dry Prohibition. On March 22, 1933, President Franklin Roosevelt signed the Cullen–Harrison Act into law which moved the U.S. away from Prohibition by allowing the manufacture and sale of beer which was approximately 4% alcohol by volume (just a little less than the average today) and some wines. After he signed, Roosevelt reportedly remarked to his aide, Louis Howe, “I think this would be a good time for a beer.”
Prohibition would officially remain in place for a few more months but the ability to drink beer and wine was worth cheering. Here are a few more facts about beer – and its close relationship to tax – to help you celebrate:
- Egypt was likely the first civilization to tax beer. Queen Cleopatra imposed a tax on beer in order, she claimed, to discourage public drunkenness, though it is widely believed that the tax was actually used to raise money to fund war with Rome.
- Beer is the most popular alcoholic beverage in the United States. As a country, we consume 205.8 million barrels per year, or about 20 gallons per person per year. In 2012, the federal government collected $9.7 billion in revenue from excise taxes on distilled spirits, beer, and wine.
- In 1695, Great Britain raised taxes on beer, making gin the cheapest beverage in England. Gin was taxed at 2d (about 2 pennies) per gallon, while beer was taxed at 4 shillings 9d (about 57 pennies) per gallon. The difference in price is considered the root of a serious drinking problem in the country in the 18th century, especially among the poor.
- In the United States, taxes on the production, distribution and sale eat up 40% of the retail price of beer. That amount includes all taxes imposed on beer: the federal excise tax is about 5 cents per drink. The actual tax rate is $18 per barrel of beer, or 10 cents per ounce of alcohol (the nickel comes from the assumption that the average beer has an alcohol content of 4.5%).
- German beers are often labeled “Gebraut nach dem Bayerischen Reinheitsgebot von 1516” which translates roughly to “brewed according to the Bavarian Purity Law of 1516.” The law originally limited the ingredients which can be used to make beer in Germany (barley malt, hops, yeast and water) and allowed the government to tax beer. The Reinheitsgebot became an official part of the German tax code in 1919 but was largely gutted when Germany became part of the European Union.
- To help pay for the Civil War, Congress imposed an excise tax on beer. The Revenue Act of 1862, signed into law by President Lincoln, included a tax on “all beer, lager beer, ale, porter, and other similar fermented liquors, by whatever name such liquors may be called.”
- Arthur Guinness II – the father of Guinness stout – altered the family beer recipe to include unmalted roasted barley instead of black malt. The unmalted barley wasn’t subject to tax which made it affordable for the Guinness family which felt crushed underneath the weight of existing taxes – it also made the beer’s taste distinctive. By the end of the 19th century, Guinness was the largest brewery in Europe.
- The first beer cans were produced in 1935. The great United States/Canadian beer can war, however, started nearly 60 years later in 1992, when Ontario announced an “environmental tax” of 10% per aluminum beer can. At the time, United States brewers sold most of their beer in cans, while Canadian brewers bottled most (80%) of their beer. Ontario claimed that the tax wasn’t meant to target United States brewers although the tax did not apply to aluminum soft drink cans. In response, the United States imposed a $3 per case tax on beer imported from Ontario. Ontario fired back with a $3 per case tax on beer imported from Stroh and Heileman breweries (both no longer in existence, largely owned by Pabst) which were, at the time, the two largest United States exporters of beer into Ontario. Today, the Ontario “environmental tax” is 8.93 cents “for each non-refillable container in which the beer bought is packaged.”
- In 1991, former President George H.W. Bush signed a bill which raised taxes on luxuries such as furs, yachts, private jets, jewelry and expensive cars (yes, despite the “no new taxes” pledge) – that same bill nearly doubled the tax on beer. The President called for the repeal of the tax just two years later and while most of the taxes included in the bill were eventually repealed, the tax on beer remained in place and is still there today.
- The most expensive state to buy a beer may well be Tennessee where state excise taxes reach $1.29 per gallon. The cheapest state to buy a beer? Wyoming with an excise tax of just .02 per gallon.
- At the North America Wife Carrying Championship, first prize is the wife’s weight in beer and five times her weight in cash. In the United States, prizes – even paid in beer – are taxable for federal income tax purposes.
- The oldest operating brewing company in the U.S. is D.G. Yuengling & Son, owned by Forbes billionaire Richard Yuengling, Jr. Yuengling, based in Pottsville, PA (just up the road from me) sells more than 2.5 million barrels of beer each year, hauling in an estimated $500 million in annual revenue each year. While the company has always been located in the Keystone State, Yuengling won’t promise he’ll won’t leave, blaming the state’s tax climate in 2012: “Pennsylvania is a great location. But it’s not very business-friendly. You look for fair tax breaks, fair taxation. And the bottom line is more jobs. That’s what it’s all about.”
(Quick tip: order a Yuengling by saying “Ying-ling” and not “Yoong-ling” or “Yang-ling”.) - Cenosillicaphobia is the fear of an empty beer glass. Okay, that’s not a tax fact, of course, just a fact. Don’t suffer any more. Go, get a beer.
Cheers!
