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Berger: Should US lower some wine taxes?
Jul 27, 2015
(PD) - Isn’t it about time the federal government lowered the tax on some of the wines we make?
In view of the fact that the federal levy on wine is a two-tier tax, it seems obvious that the government views different kinds of wine in different ways. The rules were formulated decades ago.
Wines that were between 11% and 14% were listed as “table wines,” defined as dry wines that go with food. They were taxed at $1.07 per gallon, to be paid by the producer.
Wines that were above 14% alcohol were classified as dessert wines. Historically, they were generally fortified. In most cases, such wines were sweet (such as port, sherry, madeira and the like) and were considered luxuries. As such they were taxed at an additional $.50 per gallon.
These were the original, post-Prohibition definitions, which are still in force, and were established when the vast majority of wines made in the United States were not table wines and were not dry. Most of the wines we made and consumed were fortified with brandy, had alcohols nearer to 20%, and were after-dinner sippers.
Even though the definitions and the taxes have remained the same ever since, today wine has changed considerably and the two categories no longer apply much to the wines we are now making.
For one thing, winemakers in the 1930s had none of the tools or trade tricks that today’s winemakers have at their disposal. As a result, most so-called fine wine is well over 14% alcohol, and today’s wineries do not mind paying the additional tax since they can sell their wines for so much more than they ever did. Orders of magnitude more.
For another, the government’s recognition of a two-tier taxing system for wines establishes, at least subtly if not more obviously, the government’s role in helping to explain why Prohibition was at least a good-faith try at controlling alcoholism. Congress’ goal in 1920 was really all about human health.
Indeed, I believe the government had many motives in setting up more than one tier of wine taxation. One was to “punish” those who favored higher alcohols. The higher the alcohol, the more it cost to produce.
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