March 16, 2009

Taxing Zima

In a bid to increase revenues, the State Board of Equalization took a look at ultra-sweet "malt liquor beverages" like Mike's Hard Lemonade, Smirnoff Ice, and any remaining bottles of the clear, oddly-sweet-yet-undelicious alcholoic soda known amongst my law school buddies as "That Zima Crap." The SBE determined to reclassify these alco-sodas as "liquors" instead of "beer." This would have resulted in, they hoped, an additional $38 million in revenues from the increased taxes resulting from the reclassification as college freshmen, looking to use these things as liquid panty-removers, presumably were buying them by the pallet.

As you might have guessed by now, it didn't work out that way. So far, about $9,000 in additional revenues have been generated. The manufacturers say that they've begun to derive more of the alcohol content from yeast fermentation less of it from distilling grain alcohol (otherwise known as "adding vodka to soda pop"). The stuff looks and tastes exactly like it did before, but we're told they're making it in a new way, and since they all add so much high fructose corn syrup to the drink in the first place, it seems that not even spectral analysis of the product will reveal any difference from the old ingredient list of "carbonated water, high fructose corn syrup, grain spirits, artificial flavors, FD&C Yellow #4 with BHT added as a preservative."

As the Fish Wrapper dryly notes, "Some officials and activists suspect fraud." Really? Well, good luck with that, fellas.

See, what's going on is the manufacturers have never, ever disclosed to anyone what the recipes for these bottled girl-drinks really are. Nor do they have to, and we should expect them to resist doing so because the Uniform Trade Secrets Act provides them with a powerful legal incentive to resist public disclosure of how they make these instruments of adolescent seduction. Now, they do have to provide the recipes to a Federal agency, but the Federal agency is bound by law to hold those formulae secret. Because ethyl alcohol is ethyl alcohol regardless of how it's made, the State Board of Equalization is kind of ass-out unless they can find other evidence that the product on the shelves isn't alcoholic from fermenting a liquid grain mash with yeast as opposed to distilling the grain mash into vodka.

So we'll just pretty much never know. Well, so much for that "easy money." Relying on smoke and mirrors just turns an otherwise-honest merchant into a liar -- and generates lots of work for lawyers. Or, if you really were trying to increase revenues, you might do it the old-fashioned way: go to the Legislature and get them to raise the tax on beer. That would probably have been easier, and certainly it would have been more lucrative.

Hat Tip to Outside the Beltway, which led to Kevin Drum's column on Mother Jones, and then, of all places, back to the Fish Wrapper.

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