Matthew Yglesias seconds a very bad idea mooted by Mark A.R. Kleiman in an old article on booze ‘n’ drugs: Raise the tax on alcohol, especially beer. “The average excise tax (Federal plus state) on a can of beer is about a dime,” Kleiman claims, while “The average damage done by that can of beer to people other than its drinker is closer to a dollar,” and what’s more “Raising taxes is also among the best ways to reduce heavy drinking by teenagers, for whom price is often a major consideration.”
Just about every word of this is wrong. Does anyone buy the assertion (unfootnoted in the original) that that a can of beer does, on some “average,” a dollar’s worth of damage to “people other than its drinker”? Every bar and restaurant would turn its neighborhood into downtown Beirut circa 1980 if that were true. Kleiman produces this risible estimate by averaging out all the harm done by louts, drunk drivers, and dipsomaniacs with failing livers, but raising the price of beer isn’t going to stop any of that — in fact, it will make matters much worse, for teenagers as well as adults. Kleiman’s article reflects some understanding of the monstrosity of the drug war, but one of the fundamental lessons of that war, and of earlier efforts at alcohol Prohibition, is that raising barriers to the procurement of weak intoxicants incentivizes the production of stronger ones. That was the case during Prohibition, when bootleggers brewed the strongest stuff they could (the better to get drunk on less, and the more profit per pint), and it’s been the case with the War on Drugs, leading to more potent marijuana, crack being developed out of cocaine, and crystal meth becoming an epidemic. Raising taxes on beer make hard liquor relatively more attractive; it does not much dampen underlying demand. (Least of all among teenagers, who contrary to Kleiman are willing to pay a good deal more than other people for their beer because that’s often the only way they can get it.)
Yglesias acknowledges that taxes on alcohol, like most or all consumption taxes, is regressive, but that’s ok, he says, because they’re not as regressive as tobacco taxes. That still means doing more harm to the very people that progressive say they want to help. Sin taxes, as the name denotes, are meant to be morally beneficial. But they aren’t.