Monday, May 4, 2009

Wherein We Help Jonathan Krause with His Math Skills

Jonathan Krause decided to waste his readers time this morning by bitching about a proposed tax increase that will not get anywhere to begin with, the beer tax. No matter what one thinks about the proposal, Krause walks straight into a rake at the very beginning of his argument:

Let's consider these arguments one by one. So what if the beer tax hasn't gone up since 1969? Do all taxes have to increase every year? We haven't raised the state portion of the sales tax since the early 1980's. I don't hear a lot of talk around Madison to boost that sucker every budget cycle--although it would be the best source of revenue generation the state can expect to get this time around.
Let's help Krause out with this one...

The beer tax is set at a fixed price per unit. Right now it stands at 6¢ per gallon or $2 a barrel (or 0.6¢ per bottle). It's been that way since 1969. So when I bought a six-pack of beer in 1969 I was paying 3.6¢ in beer taxes, which is exactly the same as I would be paying for the same six-pack today.Say I paid 90¢ for a six-pack of beer in 1969. That means about 4% of the price of that beer covered state beer tax in 1969.

Let's fast forward a bit to 1985. The same six-pack of beer I paid 90¢ for in 1969 now costs $2.50. The state beer tax is the same -- 0.6¢ a bottle -- but now the state only recoups only 1.44% of the cost of the same product. Today that same six-pack likely costs $5.00, of which only 0.72% of the cost is taxes.

So by indexing the beer tax to a unit of beer, instead of the cost of the unit, the state ends up collecting only about 20% of what it collected when the tax was implemented in 1969 on account of inflation. That figure probably has a lot to do with why Berceau wants to increase the tax fivefold.

The state sales tax, on the other hand, was probably the most ridiculous example Krause could have choosen to make his point. The sales tax is a percentage of the total cost of something -- 5%. So that six-pack I bought in 1985 for $2.50 would have cost me an additional 12.5¢ in state sale's tax. That same six-pack, which today costs me $5.oo, will cost me an additional 25¢ in sales tax even though the tax hasn't been increased since the early '80s.

That's a large part why policy folks don't talk about raising the sales tax lightly. It largely maintains itself with respect to inflation because it's a fixed percentage. It's also incredibly regressive and applies to just about every purchase made in the state. When a sales tax goes up, everything gets more expensive, not just beer.

Now, that's just the actual mathematics (and the elementary kind, at that) of Krause's "argument." Evidently not one for details, he continues down the boorish chest beating path we'd typically expect from him by proposing a mass "tea bagging" of the bill's sponsor:
Since we taxpayers are getting fed up with all of this new government spending--and tax increases--we have new protests to take up. Here is Representative Berceau's e-mail address: Let her know you do not support raising the beer tax--just to raise the beer tax. Or you could take the more creative approach that I am considering: Save all of you beer bottle caps this week--and send them all to Reprentative Berceau. It would be like the "Tea Party" teabag protests last month--but with a beverage that tastes a whole lot better.
You know, because nothing says "My opinion is important, rational and considerate" by starting off a letter saying "I drank this many beers!" It's a marvel this guy's policy advice isn't taken more seriously.

I'm guessing there are about 40 beer bottle caps currently in my garbage (we had people over this weekend to grill out). By my estimation, it would cost about a dollar in postage to send those caps to Madison. Personally, I'd rather use that buck to pay the beer tax on an additional 16.6667 gallons of beer.

We here at the Chief aren't fans of the proposed beer tax hike, but we don't let it worry us because it's essentially a nothing issue:
Last year, just two of 132 other lawmakers joined with Risser and Berceau to co-sponsor the bill.

Doyle told Berceau a month ago that he still opposed the tax increase. Senate Majority Leader Sen. Russ Decker, D-Weston, also would prefer not to raise the beer tax, said his spokeswoman Carrie Lynch.
But we encourage folks out there to continue to act like dicks stay envolved in their government anyway.


Anonymous said...

The Chief said:

"Since we taxpayers are getting fed up with all of this new government spending--and tax increases--"

So what is your position on increasing taxes to fund additional wage and benefit enhancements for public sector union employees?

CJ said...

Involved, not envolved brother.
(last paragraph)