Sin Tax

Dear Niece needed to make another batch of vanilla extract, and I had barely enough vodka in the house.  For those of you who don’t know, real vanilla extract is basically vanilla beans split open and soaked in vodka for a couple months.  She uses a fair amount of vanilla, and I occasionally use vodka to give myself a stomach ache, so I decided to pick up a fresh 1.75 liter bottle of Smirnoff vodka from the state ABC store (the only place that one is permitted to buy anything stronger than wine in this state).  I was charged $22.42.  They only paid $10.90 for it, and $4.99 of that was federal tax.  According to the state’s own website, the following are added to the cost of “spirituous liquor”:

  1. A Bailment Charge of $1.60 per case that goes into the State Warehouse budget.  ($0.27 based on six bottles per case)
  2. A Local ABC Board markup of 39% calculated on top of the federal taxes.  No competition means they define their margin. ($4.25)
  3. State Excise Tax of 30%, added to the total price after the markup and bailment charges have been added. ($4.62)
  4. An Additional Markup of 3.5% for Profit Distribution, also added after the items listed in #1 and #2 above.  ($0.70)
  5. A Bailment Surcharge of $0.80 per case that goes into the State Commission budget. ($0.13)
  6. A $0.05 per bottle charge for Rehabilitation. ($0.05)
  7. A $0.05 additional per bottle charge for more Profit Distribution. ($0.05)
  8. Rounding to get to the nearest $0.05. (-$0.02)
  9. Sales tax of 7% on top of all the other taxes and fees. ($1.47)

And that is how we go from $5.91 (price before fed tax) to $22.42.  Gotta love the taxing of taxes.  Just for shits and giggles teardrops, I did the calculation as a percentage of the wholesale cost at the distiller:

  • State ABC Store Markup/Profit Distribution (total): 84.6%
  • Federal tax: 84.4%
  • State Excise Tax: 78.2%
  • State Sales Tax: 24.9%
  • Bailment charge/surcharge: 6.8%
  • Rehabilitation Fee: 0.9%
  • Total tax/markup: 379%

The markup would likely be much lower if competition were allowed, but even assuming that the markup and bailment charges are reasonable, the total of admitted taxes and government fees is $11.16 – almost exactly half of the retail cost.  Anybody got any good homemade vodka recipes?

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6 Responses to Sin Tax

  1. Neal says:

    Doesn’t look like home brew will be an alternative any time soon. I’m surprised moonshine is still around as it aint cheap either and the moonshiners take quite a risk. Home grown pot would be the way to go but then you wind up a lazy stoner. Taaka vodka is the cheapest around

    • alaskan454 says:

      I wasn’t really serious about making my own. It’s too much work, and I’m too lazy. I was just bitching. I know. Surprise, surprise.

      No plans to try any weed. I’m already too damn lazy (see above). 🙂

  2. Wraith says:

    Or you could move to Arizona and buy Everclear at the corner convenience store…!! 😉

  3. hilljohnny says:

    NC abc stores carry golden grain pga for about $20 a fifth. add equal volume distilled water yields two fifths ‘vodka’. probably cheaper than brewing your own.

    • alaskan454 says:

      That would definitely work for making vanilla. I don’t drink often enough for the expense to be that big of a deal. I was just a little surprised at how greedy the tax man is. I shouldn’t have been, but I was.

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