Another important question is how the benefits and costs of alcohol taxation are distributed across the population. In assessing the fairness of a particular tax, one method is to consider the extent to which the burden of the tax falls disproportionately on lower income members of society. A tax that consumes a larger share of the income of poorer households is termed “regressive,” whereas a tax that consumes an increasing fraction of income as income rises is considered “progressive.” A study by the Congressional Budget Office (Sammartino 1990) found that, across households, expenditures on alcoholic beverages increased as income increased, but at a slower rate. As a result, lower income households paid less in alcohol excise taxes than did higher income households on average, but the taxes nevertheless consumed a larger proportion of income in lower income households. A more recent study (Lyon and Schwab 1995), found that alcohol taxes were still regressive, but slightly less so, when measured with respect to lifetime income instead of current income.
