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On April 15th, as tens of millions of Americans are sending checks to the Internal Revenue Service, it’s worth recalling the immortal words of Chief Justice John Marshall in 1819 in the case of McCulloch vs. Maryland: “The power to tax involves the power to destroy.” The wisdom of Chief Justice Marshall is especially applicable to so-called “sin taxes” aimed at industries that are viewed with disfavor by some opportunistic politicians. Unfortunately for beer drinkers, brewing is one such industry.
The federal excise tax on beer is a perfect example. In 1991, the year Schlafly began brewing, this tax was increased by a whopping 100%. Eighteen years later this is the only so-called “luxury tax” from that time that’s still around. All of the taxes on products such as yachts and jewelry that were increased that year have since been repealed because they eliminated jobs and destroyed businesses. Only the 100% increase in the tax on beer remains in effect. As a result, more than 40% of what consumers pay for beer today consists of taxes, adding up to more than $36 billion per year.
Leona Helmsley (the “Queen of Mean”) once famously remarked, “We don’t pay taxes. Only the little people pay taxes.” Not only do breweries pay all the income taxes imposed on “little people” and others. We are also subject to special “sin taxes” imposed on us alone. With American-owned breweries now constituting only five percent of the U.S. beer market, one wonders how much more additional punishment Congress needs to inflict on our industry.
The good news is that partial relief could be at hand. The Brewers Excise and Economic Relief (BEER) Act would return the beer tax to its pre-1991 level, in essence granting beer drinkers the same relief as purchasers of yachts and expensive jewelry. I encourage all alert readers (ARs) to let their representatives in Congress know that they strongly support the passage of H.R. 836.
 In all fairness, it must be noted that even if federal taxes become less onerous, they are still not likely to be any more comprehensible. Consider the case of Timothy Geithner, who as Secretary of the Treasury is ultimately in charge of collecting taxes from the rest of us. As ARs who get their news from media outlets other than The Growler already know, Secretary Geithner underpaid his taxes for years before assuming his current position. Because I would never question the integrity of an esteemed federal official in this column, I can only assume that Geithner failed to pay his taxes because he didn’t understand the tax code, not because he intended to commit tax fraud. If the Secretary of the Treasury can’t figure out the Internal Revenue Code, how can he possibly expect all of us “little people” to do so?
Timothy Geithner isn’t the only federal official who can’t understand the tax code. The congressman whose committee has primary responsibility for writing the tax laws is apparently equally befuddled. Charles Rangel, Jr., the chairman of the powerful House Committee on Ways and Means, failed to report or pay taxes on rental income of more than $75,000 from real estate he owned in the Dominican Republic. Again, I would never question the integrity of an esteemed federal official in this column. I can only take Congressman Rangel at his word when he says that he didn’t realize he had to pay taxes on income with a foreign source. I must also take him at his word when he says that he didn’t understand the nature of the income statements he received because they were in Spanish (this from a man whose congressional district has a large Hispanic population and whose father, Charles Rangel, Sr., was Puerto Rican).
Not every chairman of the Ways and Means Committee has been as insouciant with respect to the Internal Revenue Code as Congressman Rangel. Wilbur Mills, who held the position from 1957 until 1975 (longer than anyone else in history), reportedly spent evenings at home poring over the intricacies of the tax code. It was near the end of his record-setting tenure that Wilbur Mills’s world and mine overlapped, at least geographically. While he was wielding immense power on Capitol Hill, I was a student at Georgetown Law School, a few blocks away.
On the night of October 6, 1974 I was in the law school library preparing for class the next day. I may even have been studying McCulloch vs. Maryland. As often happened, I then joined a few classmates for a beer at The Tune Inn, an exceedingly unpretentious establishment on Pennsylvania Avenue in the shadow of the Capitol. We all went home by midnight in order to be wide awake for class the following morning.
That same night Congressman Mills was definitely not at home reading the Internal Revenue Code. Instead he was in the company of Annabell Battistella, aka Mrs. Eduardo Battistella, aka Fanne Foxe, aka The Argentine Firecracker, an ecdysiast at The Silver Slipper. (For the benefit of ARs who may not be Washington insiders, The Silver Slipper was a performing arts center a few blocks northeast of the White House.) The prima ballerina from Argentina and some members of her entourage had joined Mr. Ways and Means to celebrate her boffo ballet in the buff with multiple libations far too costly to be found on the wine list at The Tune Inn.
At 2:00 a.m. on October 7th, the U.S. Park Police stopped a speeding car without its lights on. Its occupants included Congressman Mills, Mrs. Battistella and her cousin Gloria Sanchez. (Mrs. Mills, like the sensible patrons of The Tune Inn, was at home asleep.) The officer who stopped the vehicle reported that Chairman Mills had a bloody nose. The Argentine Firecracker, who had two black eyes, then apparently tried to extinguish herself by jumping into the Tidal Basin (something I was never tempted to do in all my years of riding my bicycle alongside it). There was speculation at the time that the Chairman and the Firecracker had inflicted these mutual injuries in the course of a disagreement over one of her performances, perhaps a pas de deux with another partner.
Whatever differences Mills and Foxe may have had that night were resolved two months later when they appeared together on stage at the Pilgrim Theater in Boston, another renowned center for the performing arts. While the audience appreciated the kiss Mrs. Battistella bestowed on the Chairman, Carl Albert, the Speaker of the House of Representatives did not. He immediately stripped Wilbur Mills of his chairmanship of the Ways and Means committee, effectively ending his career. The incident confirmed Fanne Foxe’s status as one of the most powerful women in the world, at least in my opinion. Think about it. The Argentine Firecracker was able to blow up the career of a man who had the power to destroy tens of millions of “little people” like you and me.
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