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THE PASS‐THROUGH OF BEER TAXES TO PRICES: EVIDENCE FROM STATE AND FEDERAL TAX CHANGES
Author(s) -
Shrestha Vinish,
Markowitz Sara
Publication year - 2016
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12343
Subject(s) - economics , tax deferral , monetary economics , state (computer science) , indirect tax , tax policy , ad valorem tax , value added tax , tax reform , public economics , state income tax , gross income , algorithm , computer science
From a policy perspective, it is crucial to understand how changes in beer taxes affect retail beer prices. This study provides new evidence of the pass‐through rate of state beer taxes to prices in a post‐merger era. Our estimates that use state‐level beer tax changes suggest that a 10‐cent increase in beer taxes raises retail prices by about 17 cents. Comparable findings from the 1991 federal beer tax increase show a rise in retail beer prices of 19–22 cents. Our findings suggest that consumers fully bear the burden of increased beer taxes. ( JEL H2, I0, D4)