Errors of Opinion

san-francisco
I got an e-mail a couple of days ago from San Francisco Chronicle columnist C.W. Nevius asking for my perspective on the proposed alcohol fee for his next column. He indicated he knew my position and disclosed that he was “in favor” of it. He also added this. “But due diligence says we need to represent both sides.” Reading that, I felt that he wasn’t really prepared to listen to anything I might say, but simply felt he had to talk to someone from the opposition so the paper could keep the illusion of being “fair and balanced.” So I wrote him back and said so, about an hour or so later.

I mean no disrespect and I don’t mean to criticize, but it sounds like you want to talk to me and get my opinion just because you have to, which is never the best way to begin a conversation, if I may be so bold as to say so. We may both be entrenched in our opinions but I look forward to giving you my side of the issue and having a lively discussion.

He wrote me back and thanked me for my time, but told me he’d found an alternative for his due diligence.

His column was published yesterday, and was titled Supervisor’s fee on alcohol a terrific idea, hardly conveying even a whiff of impartiality. That’s not necessarily a bad thing. It’s a column after all, he’s not writing a report on the proposed ordinance. Nevius’ opinion is his stock in trade, it’s why he has a job. I’m not convinced that all reporting should give equal weight to both sides, and columnists especially are more free to express their own opinions. In the days when most towns had two newspapers, bias was nakedly on display. You bought the paper that most closely reflected your point of view. Bias is inevitable, at least to some degree. Journalists are human, after all, and even if the writing manages to mask that fact, the way the story is framed, structured and even the headline chosen all can convey bias to the observant reader.

And for many stories, that’s not a problem. If you’re doing a story on the roundness of the Earth, you shouldn’t have to make sure the Flat Earth Society is represented. Not every story on the Holocaust needs a comment from some wingnut who doesn’t believe it really happened. But many stories, especially those that involve creating public policy that effects everyone, should have an even higher standard of informing the public about both sides. Unfortunately, in those circumstances — when it’s most important — is when it most often doesn’t happen.

Case in point is the proposed alcohol fee ordinance. I think that this issue is one of enough importance that both sides should get an opportunity to voice their points of view equally, but so far every story I’ve seen in the mainstream and local media is completely lopsided, presenting only the side of the Marin Institute, who’s been pushing this scheme for some time now, and have finally gotten some traction with San Francisco Supervisor John Avalos. The Marin Institute, despite their protestations to the contrary, is an anti-alcohol group. In their rhetoric they claim otherwise, but it in their actions it’s completely obvious.

So while I don’t begrudge C.W. Nevius his opinions, I think they are based on propaganda and misinformation, since that’s virtually the only information out there. He’s made up his mind, and it’s obvious my arguments fall on deaf ears, since he’s read at least some of what I’ve written on the subject and still believes what he does. But that doesn’t mean I won’t try to point out why I think his opinions are based on false assumptions and errors, mostly the ones that come from the Marin Institute.

So if you haven’t already, go ahead and read Supervisor’s fee on alcohol a terrific idea. It’s not too long. I’ll wait here. …. Done, okay, let’s continue.

He begins with the assumption, that “Supervisor John Avalos is as progressive as they come, but he’s crafted a terrific proposal.” I don’t know if he’s read it, but it’s a mess of vagueness, undefined processes and unanswered questions. It’s nothing if not poorly written. But perhaps most importantly, Avalos didn’t “craft” it, the Marin institute spoon fed it to him. Their propagandist language is all over the ordinance. Just compare their press release and what’s written on their website to the proposed ordinance and you can’t help but realize that fact.

Next up: “It is focused on a serious problem in the city, it targets very real costs, and it makes specific recommendations that will make a positive difference.” I’m sure there are problem drinkers in San Francisco, but has anyone seen any statistics that support how “serious” the problem really is? I haven’t. None have been cited in connection with this ordinance. It’s just stated and everybody seems to believe it. Show me the numbers, and let’s have them be from a neutral source for a change. The Nexus Study that’s required for the ordinance has not been made public yet, as far as I know. And that means nobody can really say that the ordinance “will make a positive difference” with any certainty. People can believe that, but until it’s put into place, it’s merely conjecture. I don’t believe it will, and I don’t think a fair Nexus Study will predict the effect will be positive. But that aside, even if there are people who abuse alcohol (as I’m sure there are) it’s still not everyone who drinks. Why is punishing the majority of drinkers who do so safely and responsibly so acceptable?

“Avalos is proposing a ‘charge for harm’ fee on liquor wholesalers and distributors that could amount to as much as a nickel a drink in San Francisco.” Okay, the “charge for harm” phrase is all Marin Institute. It’s propaganda and it’s absurd. As the Pillsbury Tax Page points out, “virtually every industry can be found to place some type of burden on society.” Should bullet manufacturers and gun makers have a “fee” imposed on them because of every crime that’s committed using a gun, including any trips to the hospital from gunshot wounds? Should every heart attack victim have the burden on emergency rooms mitigated by fees on red meat and other foods that increase the risk of heart attacks? It’s a slippery slope; where do you stop? Why is alcohol the only one targeted for this notion of “charge for harm.”

Then’s there the statement that the fee will be “as much as a nickel a drink.” He’s obviously not done the math. It will be different for each kind of alcohol and each package it comes in. A nickel is the low end of the spectrum, in many cases it will be much more than a nickel. And he’s also failing to recognize that because the fee will be imposed on “wholesalers and distributors” that it will be marked up, in some cases twice, meaning it will be more than five cents across the board.

Next it’s the “city’s ambulance and fire services, clogging San Francisco General Hospital’s emergency room, and using up valuable resources.” First of all, that’s what the resources are there for, but that aside, isn’t that a failure of our health care system? It isn’t the alcohol company’s fault if people abuse it and act irresponsibly. Not everyone who drinks alcohol is a burden on the system. The vast majority are not using up the city’s “valuable resources.” But they’ll have to pay just the same.

And here’s his alternative source for due diligence so he could appear to cover both sides of the issue.

“A tax is a tax, is a tax, is a tax,” said Matt Klink, spokesman for the California Alliance for Hospitality Jobs. “The restaurant and hotel industries are already getting pummeled in San Francisco because of the downturn in the economy. This would put San Francisco businesses at a significant disadvantage.”

Actually, it’s simply a straw man. He basically used that quote just to dismiss it, knock it down, without really addressing the very real concerns of any opposition. But, unfortunately, his dismissal is incorrect, or at least ignores important facts. Nevius argues that the concerns of the California Alliance for Hospitality Jobs are a “stretch” because “Avalos’ bill only targets wholesalers and large distributors, not restaurants or hotels.” First of all, that it “only targets wholesalers and large distributors” may itself be a stretch, because the ordinance in its incompleteness fails to address how fees will be collected from self-distributing companies outside the city and also distributors who sell to businesses in San Francisco but who themselves are outside the jurisdiction of the city. But more importantly, Nevius again fails to take into account that because the fees are imposed on the distributor, they’ll be marked up. Then the restaurant and hotels that he so blithely dismisses will also mark up what they buy from the wholesaler based on the new, higher price that includes the fee. That will mean San Francisco will have the highest price booze in the state, bar none. If he thinks that’s not going to effect business — especially convention business — when there are cheaper alternatives across the bridges, in the East Bay and South Bay particularly, then he’s seriously divorced from reality.

He’s then turns his thinking over to the Marin Institute, who he quotes. “Most alcohol production is controlled and profited by corporations based in Europe,” said Bruce Lee Livingston of the Marin Institute, an alcohol watchdog agency. “This fee is trivial to San Francisco consumers and negligible to businesses.” Okay, for the millionth time, so what? An unfair fee is rendered fair because the companies are headquartered outside the U.S.? Such jingoism reminds me of the people who used to insist people buy American cars because (say it with a hick accent) them foreign ones was bad for GM and the other U.S. car companies, ignoring the fact that most employed thousands of American employees along with countless indirect businesses created for parts, sales, repairs, and on and on. Take a look at Beer Serves America to get an idea of how just beer adds jobs to the U.S. economy, not including wine and spirits. It’s a lot. And saying it’s acceptable to further tax an entire industry just because the major players are owned by multinationals seems ludicrous to me.

But even conceding that the two biggest beer companies are not primarily owned by U.S. shareholders, that still ignores over 120 small California breweries that are most definitely owned by Americans, and the majority are owned by American families. Add to that all the other American craft breweries who sell their beer in California. There are over 1,500 breweries in the U.S. today and all but two of them are owned by Americans. But the Marin Institute thinks it’s okay to target them too. Talk about collateral damage. Then there’s how many small wineries in California? Small micro-distilleries? American-owned restaurants and bars and liquor stores? Doesn’t matter, f@%k ‘em all.

Nevius concludes that “[a]ll in all this is a great idea” and the fee ordinance is a “thoughtful, reasonable proposal.” How he can come to that conclusion is beyond me.

He also never addresses the fact that because the people who supposedly cause all this harm represent only a tiny fraction of adults who legally drink alcohol, the ordinance effectively punishes the majority of drinkers who consume alcohol responsibly. So you and me have to pay more for a beer because some other yahoo couldn’t handle his drink and couldn’t be bothered to get his own health insurance. How is that fair, could someone please explain? That personal responsibility is completely ignored is also more than a little troubling. People should be responsible for their actions. But let’s not blame them, let’s instead go after the people who make the alcohol, or distribute the alcohol, or sell the alcohol. Let’s tax them more and risk more loss of jobs and revenue in a shaky economy. Let’s not try to build a more effective mass transit system so people can actually get around safely without a car. That might help ameliorate problems caused by people who drink too much. Let’s also continue to ignore the fact that alcohol is already the most heavily taxed substance sold in America. Without factoring in this new fee, of the cost of a beer, fully 44% is for taxes of one kind or another. According to a 2005 study by Global Insight and the Parthenon Group, “the total tax burden [on beer alone] adds up to nearly 70% more than the average amount of tax paid in the U.S. on all other purchases. That represents well above $10 billion in extra taxes paid on beer.” You can assume it’s as much or more on wine and spirits, too.

The Marin Institute, and similar neo-prohibitionist groups, all over the country are seizing on the poor state of our economy to further their agenda and persuade politicians that they can raise money by going after alcohol. It has nothing to do with taxes for them and in every instance I know of it comes nowhere close to fixing budget deficits even though that’s how it’s always sold. Alcohol is a handy target because it’s been so demonized throughout our history. Without knowing the facts, people accept that drinking is evil and that it’s okay to punish people who drink because they’re committing a sin anyway. It sounds crazy, but people really still believe that. But alcohol also has a myriad of health benefits and in moderation is part of a more enjoyable and healthier lifestyle, both physically and mentally.

There’s no doubt that the economic problems being faced by governments at all levels, from the federal to the local, are serious and need to be fixed. But taxing — yes, taxing — one of the few industries holding its own and keeping people employed and paying its already hefty taxes cannot be the right answer. It targets the wrong people, it punishes the innocent indiscriminately, it won’t fix the problem it’s purported to fix and it’s done for all the wrong reasons. What about that sounds like “a terrific idea.”

Comments

  1. Mr. Nuts says

    At least you read through his smoke screen and called him on his bias. The Chron’s great for wrapping fish. That’s about it.

  2. Ed Chainey says

    I suggest that this fee will not stand up to judicial review, as it attempts to regulate – without due process – the alcohol industry at the local level, when in fact the 21st Amendment makes clear that this is the prerogative of the states – and established California law has struck down local ordinances which attempted to usurp the individual state’s laws.

    Excerpts From Wikipedia:
    Text of the 21st Amendment
    “ Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed.
    Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.
    Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

    The requisite number of states ratifying the 21st Amendment was completed on December 5, 1933.

    State and local control
    The second section bans the importation of alcohol in violation of state or territorial law. This has been interpreted to give states essentially absolute control over alcoholic beverages, and many U.S. states still remained “dry” (with state prohibition of alcohol) long after its ratification. Mississippi was the last, remaining dry until 1966;[5] Kansas continued to prohibit public bars until 1987.[6] Many states now delegate the authority over alcohol granted to them by this Amendment to their municipalities or counties (or both), which has led to many lawsuits over First Amendment rights when local governments have tried to revoke liquor licenses.
    Court rulings
    Section 2 has been the source of every Supreme Court ruling directly addressing Twenty-first Amendment issues.
    Early rulings suggested that Section 2 enabled states to legislate with exceptionally broad constitutional powers. In State Board of Equalization v. Young’s Market Co., 299 U.S. 59 (1936), the Supreme Court recognized that “Prior to the Twenty-first Amendment it would obviously have been unconstitutional”[7] for a state to require a license and fee to import beer anywhere within its borders. First, the Court held that Section 2 abrogated the right to import intoxicating liquors free of a direct burden on interstate commerce, which otherwise would have been unconstitutional under the Commerce Clause before passage of the Twenty-first Amendment.[8] In its second holding, the Court rejected an equal protection claim because “A classification recognized by the Twenty-first Amendment cannot be deemed forbidden by the Fourteenth.”[9] Over time, the Court has significantly curtailed this initial interpretation.
    The aim of the Twenty-first Amendment was to allow States to maintain an effective and uniform system for controlling liquor by regulating its transportation, importation, and use. The Amendment did not give States the authority to pass non-uniform laws in order to discriminate against out-of-state goods, a privilege they had not enjoyed at any earlier time.[24]

    State of California

    Below are the pertinent California rules regarding local attempts to usurp the state’s authority.
    These can be found at: http://abc.ca.gov/forms/ABCAct_2009.pdf

    DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL
    Alcoholic Beverage Control Act

    Business and Professions Code

    Page 6:
    The Department of Alcoholic Beverage Control shall have the exclusive power, except as herein provided and in accordance with laws enacted by the Legislature, to license the manufacture, importation and sale of alcoholic beverages in this State, and to collect license fees or occupation taxes on account thereof.

    Page 7:
    Who may license.—Subsequent to April 6, 1933, and prior to December 5, 1933 (the operative date of this section), a municipal corporation, as well as the State, had the right to license, for revenue, dealers in liquor. Los Angeles Brewing Co. v. City of Los Angeles, 8 Cal. 2d 379. After December 5, 1933, the right of a municipal corporation to impose a license tax for the purpose of revenue upon such dealers was removed. Los Angeles Brewing Co. v. City of Los Angeles, 8 Cal. App. 2d 391. Payments made after December 5, 1933, for liquor license tax stamps were made involuntarily when the payment was required by a city ordinance imposing severe civil and criminal penalties for failure to pay the tax and the payment was accompanied by a written protest. Vitale v. City of Los Angeles, 13 Cal. App. 2d 704.

    Page 8:

    Local revenue affected by state centralization of liquor control.—The provision in this section for apportioning license fees or occupation taxes is recognition of the fact that centralization of liquor control in the State Government would deprive local subdivisions of the State of a potential source of revenue. Roehm v. County of Orange, 32 Cal. 2d 280.
    Local option.—Section 38f of the Alcoholic Beverage Control Act providing for license limitation does not give to cities or counties any right to make a general protest against the policy of issuing additional licenses, for such a right would be entirely different from anything otherwise given to cities and counties and would be contrary to the purpose expressed in this constitutional provision, which vests matters exclusively in the State Government. San Diego v. State Board of Equalization, 82 Cal. App. 2d 453.
    Municipal excise tax validly applied to purchases of intoxicating liquors.—Section 22 of Article XX of the State Constitution, reserving to the State the “exclusive . . . power to . . . regulate” the “sale” and “purchase” of intoxicating liquor is not violated by application to the sale of intoxicating liquors of a municipal ordinance imposing an excise tax on the purchase at retail of tangible personal property and requiring collection of the tax from the purchaser by the retailer. Ainsworth v. Bryant, 34 Cal. 2d 465.

    Note, the above provisions make clear that the ABC act “vest matters exclusively in the State Government” and allowing “an excise tax on the purchase at retail” is not excluded, which is different than the San Francisco ordinance which is targeting Wholesale activity.
    Page 9:

    Alcoholic beverage taxation.—The application of a payroll expense tax ordinance adopted by a chartered city and county to wholesale liquor and beer distributors doing business in the city was not precluded by the provision of California Constitution, Article XX, § 22, giving the Department of Alcoholic Beverage Control the exclusive power to collect license fees or occupation taxes on account of the manufacture, importation, and sale of alcoholic beverages. A.B.C. Distributing Company, Inc., v. City and County of San Francisco, 15 Cal. 3d 566.

    Note that the exemption allows for a payroll tax – not a per case fee/tax as is proposed in San Francisco.

    Page 18:

    23051. Succession to powers, etc., of State Board of Equalization. On and after January 1, 1955, the department shall succeed to all of the powers, duties, purposes, responsibilities, and jurisdiction now conferred on the State Board of Equalization under Section 22 of Article XX of the Constitution and this division, except the power to assess and collect such excise taxes as are or may be imposed by law on account of the manufacture, importation, and sale of alcoholic beverages in this State, which shall remain the exclusive power of the State Board of Equalization.
    All other laws heretofore or hereafter applicable to the State Board of Equalization with respect to alcoholic beverages, except as to excise taxes, shall hereafter be construed to apply to the department.
    Any license issued by the board and in effect on December 31, 1954, shall be deemed on and after January 1, 1955, to be a license of the department.

    Finally, note that no where in the ABC Act does the State of California grant municipalities the right to impose fees or taxes on inventory – such as this proposal would do – at the city or county level. And it does expressly state that such regulation is the exclusive prerogative of the State of California.

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