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1 Adam Hoffer, Modernization of the Alcohol Tax 1 (2023)

handle is hein.taxfoundation/mdnznoteal0001 and id is 1 raw text is: * TAX FOUNDATION Modernization of the Alcohol Tax Adam Hoffer Director of Excise Tax Policy December 2023 Key Findings • Alcohol is one of the most highly taxed products in the United States. The federal government takes a categorical approach to alcohol taxation (e.g., taxing based on classification such as beer, wine, or spirits), to which states add their own taxes for products in each category. • Alcohol production has been one of the most innovative spaces in the U.S. economy. New products have further blurred existing categorical lines. The changing product landscape suggests the need for a change in tax policy. • Currently, alcohol taxes are non-neutral. Per ounce of alcohol, spirits are taxed at more than three times the rate of wine and double that of beer. • Inefficiencies in the federal alcohol tax system are exacerbated by policies such as the rum cover-over, rum production subsidies, wine production subsidies, and spirit tax rebalancing (Section 5010). • An alcohol by volume (ABV) tax could replace the existing alcohol tax system. An ABV tax would make alcohol taxes simpler, more transparent, and substantially more neutral than the current system. • If a full revamp of the alcohol tax is infeasible, policymakers should add several new tax categories to modernize the current categorical system. The Tax Foundation is the world's leading nonpartisan tax policy 501(c)(3) nonprofit. For over 80 years, our mission has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. TAX FOUNDATION 1325 G STREET, NW, SUITE 950, WASHINGTON, DC 20005 202-464-6200 1 taxfoundation.org

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