Posted on 05/13/2024 7:09:28 AM PDT by Twotone
Arcane tax rules based on carbonation levels are flattening the growth of America's craft cider industry.
America's tax code is notoriously convoluted, but the complexity really sparkles when it comes to the federal government's approach to alcohol taxation. Wine, beer, and liquor are all subject to varying tax rates based on intricate calculations, but the so-called "bubble tax" for hard cider is the star of this regulatory circus.
Unbeknownst to most Americans, the tax rate for alcoholic cider is based on, among other things, the amount of carbonation the drink contains. Yes, America technically already has a carbon tax and the feds have literally found a way to tax air. Craft cider makers are being flattened by an arbitrary system that is strangling the industry's long-term potential.
Under the federal code, alcoholic cider is taxed as either hard cider, still wine, or sparkling wine, and the implications of which category applies are not insignificant. Hard cider is taxed at a modest $0.226 per gallon, while sparkling wine is taxed at a whopping $3.40 per gallon—a staggering 1,400 percent increase. For every 100 gallons of cider produced, Uncle Sam either takes $22 in taxes or $340 in taxes.
What determines how cider is categorized and taxed? A ridiculous three-part formula based on a) what type of fruit is used to make the cider, b) the alcohol content of the cider, and c) what carbonation level the cider contains.
Imagine you're a cider maker aiming for the lower tax rate to apply to your product. You need to produce a cider that is made from apples or pears (with no other fruit additions), is less than 8.5 percent alcohol by volume (ABV), and has less than or equal to 0.64 grams of carbon dioxide (CO2) per 100mL. However, if you decide to add some blackberries or grapes, it's considered a still wine and taxed at $1.07 per gallon—but only if it has less than 0.392 grams of CO2 per 100mL. If you go over that carbonation threshold, you've unlocked sparkling wine status and with that the $3.40 per gallon tax rate.
Confused? It gets worse.
If your pear or apple cider is over 0.64 grams of CO2, it gets the sparkling wine rate. But it's knocked back down to the still wine rate if it's less than 0.392 grams of CO2 and the ABV level is 8.5 percent or higher. Whether the bubbles are added via "force carbonated" or "bottle conditioned" carbonation creates another tax delineation for the sparkling wine category. A flow chart is needed just to unpack all the potential permutations and combinations:
Flowchart of bubble taxes (American Cider Association)
The implications of this tax labyrinth extend to consumers. A report from Wine Enthusiast notes that modern drinkers have grown to expect beer-like carbonation levels in their alcoholic beverages, thereby creating pressure for cider makers to add more carbonation to their products.
One cider maker from Oregon reported that he receives frequent emails from consumers complaining about flat cider, which they incorrectly blame on him rather than the government. If adding more carbonation could financially cripple a small business, it's little wonder many cider makers feel that their hands are tied.
The disparity is glaring when compared to beverages like beer, hard seltzer, and regular soda, which face no such carbonation-based tax penalties. It's a clear disconnect from market realities and consumer demands, which increasingly favor diverse flavors and more carbonation in ciders.
Craft cider makers are doing their best to diversify the carbonation levels and fruits in their ciders to respond to consumer demand, but it's clear the industry has a hard ceiling on its growth due to these tax rules. This is why many cider makers state that their ability to expand—and the ability of the industry as a whole to thrive—is being pointlessly inhibited.
The bubble tax is now getting more attention due to a recent bipartisan bill introduced in Congress, which aims to level the playing field between apple and pear ciders and those made with other fruits. While promising, the best reform would be to convert the entire system of alcohol taxation to one based simply on a drink's ABV level rather than arbitrary classifications.
Craft cider, a beverage steeped in American history, deserves better. Another Michigan cider maker made it even simpler: "It's not expressing the free market. The government needs to get out of the way."
Tariffs and Sales Tax. It should be in the Constitution that revenue cannot be raised in any other ways.
The bums in government who come up this over-regulation should be fired immediately and taxed for any statements they say about being fired. They are typical useless government employee losers.
“the best reform would be to convert the entire system of alcohol taxation to one based simply on a drink’s ABV level rather than arbitrary classifications.”
this would clearly be the best solution, there are probably too many vested interests who would object.
Wait til the dems conclude that fat people far more…
Pretty simple, educate the consumer.
Put a label on the cider indicating how the tax is calculated - maybe put a QR code with a link to a web page if the description is too long. It would give consumers something to talk about while drinking.
If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet
Yet the market is flooded with carbonated alcoholic seltzers which are not subject to these arcane taxes. The taxing and regulation of alcoholic beverages is still mired in a post Prohibition mentality where the government by taxing and regulation aims at controlling the consumption of alcohol. The Peoples Republic of Minnesota is the last holdout for 3.2% beer, a Prohibition anachronism for a less intoxicating beer.
"The Federal Government is Literally Taxing Air"
FR: Never Accept the Premise of Your Opponent’s Argument
The states have never expressly constitutionally given the unconstitutionally big federal government the specific power to police the environment.
"From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added]." —United States v. Butler, 1936.
And many patriots don't seem to understand that the powers of the constitutionally limited power federal government to appropriate taxes are likewise limited.
Unconstitutional federal taxes, taxes that the post-17th Amendment (17A; popular voting for federal senators) ratification Congress cannot reasonably justify under its constitutional Article I, Section 8-limited powers and a few other constitutionally enumerated expenses, are facilitated by the federal government's abuse of its repealable 16th Amendment powers (16A; direct taxes).
"16th Amendment : The Congress shall have power to lay and collect taxes on incomes, from whatever source derived [emphasis added], without apportionment among the several States, and without regard to any census or enumeration."
"Congress is not empowered to tax for those purposes which are within the exclusive province of the States." —Justice John Marshall, Gibbons v. Ogden, 1824.
“If the tax be not proposed for the common defence, or general welfare, but for other objects, wholly extraneous, (as for instance, for propagating Mahometanism among the Turks, or giving aids and subsidies to a foreign nation, to build palaces for its kings, or erect monuments to its heroes,) it would be wholly indefensible upon constitutional principles [emphases added].” — Justice Joseph Story, Commentaries on the Constitution 2 (1833).
From the congressional record:
”Simply this, that the care of the property, the liberty, and the life of the citizen, under the solemn sanction of an oath imposed by your Constitution, is in the States and not in the federal government [emphases added]. I have sought to effect no change in that respect in the Constitution of the country.” —John Bingham, Congressional. Globe. 1866, page 1292 (see top half of third column)
“Cherish, therefore, the spirit of our people, and keep alive their attention. If once they become inattentive to the public affairs, you and I, and Congress and Assemblies, judges and governors, shall all become wolves [emphasis added]. It seems to be the law of our general nature.” - Thomas Jefferson (Letter to Edward Carrington January 16, 1787)
Pelosi: "We have to pass the bill so that you can find out what is in it." (non-FR; 6 sec.)
Democrats [and RINOs] Are Terrified Of An Educated And Informed Public (3.12.23)
Trump's tsunami of Democratic and Republican patriots need to support hopeful Trump 47 with a new Congress in November that will not only support him to finish draining the swamp, but will also do the following.
New lawmakers additionally need to support Trump in leading the states to put a stop to unconstitutional federal taxes and unconstitutional interference in the affairs of the sovereign states.
More specifically, Trump needs to lead ALL the states need to effectively "secede" from the tyrannical federal government by repealing 16&17A.
Consider the repealing of 16&17A as part of reparations for victim taxpayers of the corrupt federal government for having to pay a lifetime of unconstitutional federal taxes.
If you take a walk I will tax your feet.
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