Policies Regulating Alcohol, U.S.

Post-Prohibition Alcohol Policies

Federal, state, and local governments have established a variety of laws and policies designed to reduce problem drinking by making alcohol harder to get, more expensive, or less fashionable to indulge (or over-indulge) in. The range of those policies demonstrates the options short of prohibition for controlling drug abuse. Their modest effectiveness, and the success of the alcoholic-beverage industries in resisting stiffer controls, illustrate the limits to regulation and taxation as substitutes for prohibition.

Taxation

In addition to the sales tax collected on most items by state and local governments, governments at all levels impose “specific excise taxes”—that is, taxes based on quantity and composition, rather than price—on alcoholic beverages. Beer, which accounts for approximately two-thirds of the alcohol consumed, is taxed, on average, at approximately $0.10 per 12-ounce can, roughly 10 percent of the total retail price. Wine is taxed less: about $0.06 per standard drink, while distilled spirits, which make up the smallest part of the market, are taxed at more than $0.20 per drink. On an inflation-adjusted basis, taxes were at several times today's levels during the Korean War; since then, inflation has been allowed to eat away at the real-dollar value of alcohol taxes. Taxation is an unusually potent weapon against alcohol abuse, because it has its primary effects on drinking by heavy drinkers and by teenagers. Philip J. Cook estimates that doubling the tax would reduce both violent crime and motor vehicle fatalities by approximately 3 percent; the revenue gain, after adjusting for reduced volume, would be on the order of $7 billion per year.

A U.S. Bureau of Internal Revenue chemist testing bottles of illegal alcohol bearing invalid revenue stamps around 1920.

The Minimum Legal Drinking Age

In the post-prohibition era, many states established a legal minimum drinking age of 21. However, 29 states lowered the minimum drinking age to 18 in reaction the apparent contradiction that young people could be drafted to serve in the military, serve on juries, and enter into legally binding contracts at the age of 18 but were denied access to alcohol. Citing evidence of increased alcohol-impaired driving fatalities among young adults, the federal government passed the National Minimum Drinking Age Act of 1984, which withheld federal highway funds from states that did not increase the minimum legal drinking age to 21. By 1988, all states passed legislation to meet the federal standard.

There are several policies to prevent underage drinking that directly target minors. For example, all states currently prohibit minors from purchasing, possessing, and consuming alcoholic beverages, although several states allow exceptions when [Page 646]a family member provides consent and/or is present. The use of false identification by minors to purchase alcohol is also prohibited and most states have specific policies targeting those who supply minors with false identification. In addition, many states set a minimum age of 21 for employees who sell and/or serve alcoholic beverages. In states that allow underage employees to serve and/or sell alcohol, provisions may require a manager or supervisor who is 21 years or older to be present during the sale. Violations of these (and other) policies by minors can include special penalties such as revocation of driving privileges, and criminal charges such as “minor in possession” of alcohol (MIP).

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