Taxation of Alcoholic Beverages

February 28, 1941

Report Outline
Proposed Change in Treasury Regulations
Revenues Yielded by Liquor Taxes
Liquor Tax Rates and Consumption
Bootlegging and Tax Evasion Since 1933
Special Focus

Proposed Change in Treasury Regulations

Total public revenues from alcoholic beverages in 1940 are estimated as $1,171,000,000. Most of this money went to the federal and state governments, which received about $776,000,000 and $355,000,000, respectively. In both cases, the amount was greater than receipts from liquor taxes in any previous year, before or since the eighteenth amendment. It is almost certain, however, that with largely increased revenues needed for defense an attempt will soon be made in Congress to raise the rates of federal liquor taxes to higher levels. Chief deterrent to such a move is the fear that higher rates might actually bring in less money, as a result of decreased consumption of legal liquor and a corresponding increase in bootlegging.

A tacit admission that bootlegging remains a serious problem has recently been made by the Treasury Department, which will hold a public hearing March 18 on a proposal to legalize the sale of whisky, brandy, rum, and gin at 60 proof instead of the minimum of 80 proof now prescribed by departmental regulations. Since the federal tax is based on alcoholic content rather than on the amount of liquor, it would be possible to sell 60 proof whisky for a substantially lower price than the present prices for 80 to 100 proof liquor, and it is hoped that a lower price might discourage bootlegging by more effective competition.

Since July 1, 1940, the federal tax on straight whisky and other distilled spirits has been $3.00 a gallon at 100 proof. This amounts to $.375 for each pint of 100 proof liquor, or $.30 for a pint at 80 proof. If the proof were reduced to 60, the tax would be only $.225 a pint, or 40 per cent less than the present rate for bonded liquor. Federal officials say that bootleg liquor averages about 70 proof, and they believe that if 60 proof whisky were legally available at a competitive price, there would be less incentive to purchase an inferior illegal product.

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Mar. 24, 1965  Excise Tax Cuts and the Economy
Feb. 15, 1961  Flexible Taxation
Apr. 02, 1959  State Tax Problems
Apr. 23, 1958  Tax Reduction, 1958
Aug. 14, 1957  Fast Tax Write-Offs
Apr. 10, 1957  Federal Payments in Lieu of Taxes
Sep. 12, 1956  Corporation Profits and Taxes in Prosperity
Mar. 16, 1954  Shares in Tax Relief
Nov. 21, 1953  Revision of Excise Taxes
Mar. 19, 1953  Federal-State Tax Relations
Oct. 01, 1952  European Taxes and Tax Evasion
Nov. 03, 1950  Excess Profits Tax
Feb. 01, 1950  Tax Loopholes
Jun. 04, 1949  Excise Taxes
Oct. 27, 1948  Postwar Sales Taxes
Aug. 29, 1947  Taxation of Family Income
Apr. 09, 1947  Income Tax Relief
Jan. 11, 1946  Taxation of Cooperatives
Oct. 16, 1945  Federal Taxes on Business
May 08, 1944  Postwar Taxes
Sep. 20, 1943  Sales Taxes
Dec. 05, 1941  New Taxes for Defense
Apr. 05, 1941  Taxation for National Defense
Feb. 28, 1941  Taxation of Alcoholic Beverages
Jan. 11, 1941  Exemptions from Taxation
Dec. 04, 1940  Federal Taxes and Defense Financing
Feb. 01, 1940  Sharing of Tax Revenues
Feb. 02, 1939  Turnover Taxes in the States
Nov. 05, 1937  Broadening of the Income-Tax Base
Jun. 17, 1937  Exemptions from Income Taxation
Apr. 05, 1937  Coordination of Federal and State Tax Systems
Dec. 19, 1936  Revision of Federal Tax on Capital Gains
Nov. 02, 1936  State Taxation of Natural Resources
May 26, 1936  Assessment of Property for Taxation
Apr. 17, 1936  Federal Taxes on Consumption
Mar. 19, 1936  Taxation of Undistributed Corporate Profits
Dec. 17, 1935  Reduction of Tax Burdens on Real Estate
Oct. 21, 1935  Tax Delinquency in the United States
May 21, 1935  Comparative Tax Burdens in America and Britain
Feb. 01, 1935  Federal Taxation of Corporations
Nov. 27, 1934  Elimination of Conflicts in Taxation
Jul. 25, 1933  Taxation of Excess Profits
Jan. 25, 1933  Tax Burdens and Tax-Free Securities
Nov. 23, 1932  The Beer Tax and the Sales Tax
Dec. 19, 1931  Sales Taxes: Federal, State, and Foreign
Sep. 18, 1931  Death Taxes and the Concentration of Wealth
Mar. 18, 1931  Federal Taxation of Large Incomes
Jan. 10, 1931  Taxation of Capital Gains
Nov. 09, 1929  Federal Tax Reduction-1930
Aug. 08, 1927  Federal Tax Reduction—1928
Sep. 27, 1926  Tax Reduction and the Public Debt
Jan. 16, 1926  Taxation of Estates and Inheritances
Nov. 07, 1925  Federal Taxation of Small Incomes
Nov. 28, 1924  Social, Fiscal and Legal Aspects of the Inheritance Tax
Apr. 07, 1924  Causes and Effects of the Tax Return Blockade
Dec. 12, 1923  Tax Exempt Securities
Dec. 10, 1923  Taxation
Federal Taxes
State and Local Taxes
State, Local, and Intergovernmental Relations