Does Cutting Alcohol Taxes Cost Lives?

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The current tax reform plan working its way through Congress includes cuts to alcohol excise taxes, which in turn has reignited the debate over whether slicing such taxes is dangerous for public health. Publications like Vox and the Washington Post have recently published articles arguing that reducing booze taxes would lead to more alcohol-related deaths, while organizations like the National Taxpayers Union have pushed back against this claim. The Post cited one source who predicted 3,100 more people would die over a 2-year period from the proposed alcohol taxes cuts:

"Record numbers of Americans are drinking themselves to death each year, in part because booze is now cheaper than it's been at any point in the past half century.

Historically low federal taxes on alcohol are partly responsible for this trend. In 1951, the federal excise tax on a standard shot of 80-proof whiskey was about 90 cents in today's dollars. Today that number is closer to 13 cents, and falling every year because of inflation.

For years, experts have been calling on Congress to raise the alcohol tax on public health grounds. “Higher alcohol taxes save lives,” as Duke University's Philip Cook summed it up in 2015. But the lawmakers behind the Senate's tax bill have decided instead to lower it even further.

Those cuts 'will lead to more drinking and thus more alcohol-related deaths and violence,' according to the Brookings Institution's Adam Looney..."

The National Taxpayers Union called the Post's article the "most outrageous story to date," since, among other things, it doesn't sufficiently take into account the elasticity of demand for alcohol and consumers' responses to price changes:

"As demonstrated by this meta-analysis of 182 studies on the subject, the article fails to properly address the elasticity of demand (how the change in price will change demand). Individuals who are most likely to die from alcohol-related health problems tend to be abusers of alcohol. Research shows these individuals have an inelastic demand (meaning a change in price will only slightly affect demand) and will continue to drink no matter how high or low the price of alcohol becomes. As the meta-analysis states, “While many moderate drinkers probably respond to changes in prices of most alcohol beverages, it does not follow that an across-the-board price or taxation policy will directly reduce heavy drinking.” Because of this, higher taxes are an ineffective approach to trying to stop alcohol abuse..."