Everywhere you turn, it seems like there's a new tax you have to pay. Recent news that the federal government could allow states to start taxing Internet transactions has raised an uproar among shoppers who for years have been able to use online retailers to avoid sales tax.
As we examined yesterday, beer-drinkers get hit hard in many states that impose high excise taxes on the beverage. At the state and local level, although state income taxes, property taxes, and general sales taxes provide a lot of tax revenue, most states also use other taxes to find more money for government programs. But some states don't make drinking beer nearly as expensive. Turning once more to the Tax Foundation for data at the state level, let's take a look at the six states that charge the least in excise taxes per gallon on beer sales, along with figures from the Beer Institute showing where they rank in terms of beer consumption.
Oregon weighs in with the sixth lowest tax rate in the nation, as it has excise taxes that round to just $0.08 per gallon. Even with beer consumption of 30.2 gallons per person putting the state right around the middle of the pack, the microbrewery industry is especially important in the Pacific Northwest, and Oregon's low excise taxes help provide support for small microbrewers seeking to sell their products in-state. Moreover, with very high income-tax rates, Oregon generally has other sources of tax revenue to rely on.
4 (tie). Colorado
Colorado's beer excise taxes also come in at $0.08 per gallon, perhaps reflecting the importance of the Coors brand of Molson Coors (NYSE:TAP) to the state's overall economy. That's a trend you'll see elsewhere on the list, as well as with Massachusetts, which just barely missed the list at No. 7 and provides the headquarters for craft-brew specialist Boston Beer (NYSE:SAM). Per-capita beer consumption of 30.9 gallons per year leaves Colorado at No. 20 nationwide.
4 (tie). Pennsylvania
Pennsylvania's $0.08 beer excise tax matches Colorado's perfectly, leaving the two states in a tie. But Pennsylvania's per-capita consumption of 29.1 gallons per year doesn't even crack the top half of all states. Ample tax revenue from income and general sales taxes appears to be sufficient to allow the state to let beer-drinkers off the hook for a big tax bill.
Wisconsin also has a major brewing presence, as the traditional location of SABMiller's Miller Brewing. With beer excise taxes of $0.06 per gallon, the state's drinkers are highly appreciative, as Wisconsin ranks sixth in the country for per-capita beer consumption at 36.2 gallons. High income and property taxes also give the state government alternative revenue.
The traditional home of Anheuser-Busch InBev (NYSE:BUD), Missouri charges just $0.06 per gallon in beer excise taxes. Again, the key presence of a major brewer is probably behind the state's decision to minimize taxes on beer. Somewhat surprisingly, beer consumption isn't all that high, with the 31.1 gallons per year of beer that the average person drinks barely enough to put Missouri into the top 20.
Why Wyoming would have the lowest beer taxes in the nation isn't immediately obvious, but at $0.02 per gallon, no other state even comes close. What's particularly surprising is that with no state income tax, Wyoming might typically try to use beer taxes as a way to collect revenue. Beer consumption is fairly high, with 32.4 gallons per person annually putting the state almost into the top third.
Protecting their own
As many of these figures show, states often take steps to protect important industries within their borders, and so many of the states with the lowest beer taxes have major beer companies that do business there. The net result, though, is a big benefit for beer-drinkers who live or purchase beer in those states.
Massachusetts just barely missed this list, but Boston Beer's Samuel Adams brand helped to redefine beer and kick off the craft beer revolution throughout the United States. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Boston Beer and Molson Coors Brewing and owns shares of Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.