Taxation in the Alcoholic Beverage Field
Law & Contemporary Problems
Alcoholic beverages and the traffic in them have always been well-recognized objects of taxation. Both as a revenue producer and as a means of curtailing the consumption of these beverages the tax upon them has been in use for a long time and in many countries.' In this country before the Revolution, import duties on spirituous liquors were common in all the southern colonies and the New England colonies, and New York taxed their manufacture and sale. 2 During the Revolution, New York,
... New York, Pennsylvania and some of the southern states were loath to impose direct taxes but they did raise revenue from liquor and other excises; while in the period shortly after the Revolution, liquor and other internal excises were an important component of state revenues. 3 During the Confederation a proposal that the central government levy an excise on liquor made no headway. But only two years after the ratification of the Constitution our first national tax bill, a customs measure, included import duties on liquors. Two years later, in i791, the first national internal excises included a tax on whiskey. The whiskey tax was discontinued in 1802 and it was not until the exigencies of the War of 1812 demanded that more revenue be raised that liquor was again taxed. Revenues from import duties declined sharply in the years after x8ii, and the special session of Congress in 1813 imposed license taxes on stills and on the retailing of both wines and spirituous liquors. 4 After a few years the tax was again abandoned, not to be used again until in 1862, when Civil War financing began to present an acute problem. From that time, up to the present, we have had national taxes of one type or another on alcoholic beverages. The states and local governments also levied taxes on the traffic in alcoholic beverages but these taxes were in the nature of license or occupational taxes rather than excises on production or sales as was the federal tax. As a matter of fact, in the prosperous days of the i79o's when the states were receiving large incomes from their holdings of federal bonds, state bank stocks, sales of public land and confiscated loyalist properties, the liquor tax was one of the few that was generally kept in effect. 5 * LL.B., 1938, George 'Washington University. Member of the District of Columbia Bar. Assistant Director, Federation of Tax Administrators, Chicago, Illinois. 'See the summary statement in the Wickersham Report. Nat. Comm. on Law Obs. and Enf., Report on the Enforcement of Prohibition Laws of the United States, H. R. DoC. No. 722, 7st Cong. 3rd Sess. (1931) 3; TWENTIETHt CENTURY FNm, FACING THE TAX PROBLEM (1937) 199. 2 SHJLTZ AND CAINE, FINANCIAL DEVr-LOPMENT OF THE UNITED STATES (1937) 17-18-'Id. 65, 79. 'Id. 141. 'Id. ix8.