Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 29, 1990 TAG: 9007290053
SECTION: NATIONAL/INTERNATIONAL PAGE: A12 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The proposal, which would cost drinkers $7.2 billion a year, is part of the second deficit-reduction tax increase offered by the administration this year. The new package has yet to be agreed to by Republican congressional leaders - let alone by top Democrats - who are trying to negotiate deficit cuts of more than $50 billion for next year.
Under the proposal, the $1.98 federal tax on a fifth of 80-proof vodka would rise to $2.54. For the first time in almost 40 years, taxes on beer and wine would be raised as well, so that an ounce of drinking alcohol would be taxed at 25 cents, regardless of the form.
That would boost the 16-cent tax on a six-pack of beer to 81 cents and the 3-cent tax on table wine to 76 cents. The tax on other forms of wine, which is based on alcohol content, would go up accordingly.
Analysts say the impact would be felt most by those with the lowest incomes, simply because they tend to spend a greater share of their earnings on alcohol than do the more affluent.
According to the Congressional Budget Office, the 20 percent of Americans with the lowest incomes (averaging $8,228 after taxes) spend $308 a year or 3.7 percent on liquor, wine and beer. The top one-fifth, with after-tax incomes averaging $77,622, spend about $1,210, or 1.6 percent.
A second new element of the administration plan, limiting the federal deduction for state and local income taxes, was condemned by the nation's governors at their annual meeting Saturday.
by CNB