Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1941-11-20
Distilling Seen As
Big Asset To State
University of Maryland Study
Reveals Economic
Importance

WARY ldHu TeCGlNSu 11Io VI us
total state revenue from taxes on
alcoholic beverages in 1910, accord
ing to a report just published by
the University of Maryland on
study of the economic aspects of
the distilling industry in this State.
This study was made under the
supervision of DR.. S. H. Default
and William Paul Walker, Of the
faculty of the Department of Agri-
cultural Economics, who have fire.
quently served as advisers on tax
matters to the Governor, the Legis-
lature, special tax omissions and
various farm organizations
throughout the state.
Distillers in Maryland covered by
the study paid Federal taxes of
9,949,078 and state and local
taxes of $277,946 in 1910, accord
ing to their report. Pointing out
that taxes on distilled spirits con-
stitute the major portion of all al
coholic beverage taxes, the authors
conclude that the Federal, State
and local governments which share
in the direct and indirect taxes on
distilled spirits cannot afford to
jeopardize these revenues or to en-
courage illicit trade by excessive
taxation on distillers and distilled
spirits under present conditions"
The report shows that in 1910
the distilling industry in Maryland
had capital investment of $751;
100000, paid out $2,3O0,000 in
wages, spent $7,633,000 for raw
materials, and purchased services
and supplies valued at $5,500,OOO
from other industrial concerns. The
industry produced 11,862,632 proof
gallons of raw spirits during that
period, and paid taxes, or assumed
obligation for taxes presumably
recoverable through sale price, OF
over $3O,OO0,O0O.
Grains and malts represented
about 3O@c of the cost of the basic
materials used in the manufacture
of distilled spirits in Maryland dur
ing the year covered by the study,
and the distilling industry of the
State spent $2,273,358 for such
grains that year. A total Of
2,84O, 1872 bushels of high quality
grains, including 1,119,154 bushels
of corn and LII, $3.50 bushels of rye
was used. This represented about
one-sixteenth of the amount of
corn and four and one-half times
the amount of rye produced an
nually by farmers in Maryland.
More than $4,900,O0O was spent in
Maryland and elsewhere for bar
rels, bottles, cartons, caps, adhe-
sives and other supplies that year,
and about 100000 for electricity
and fuel.
"The distilling industry in Mary
land is not an isolated enterprise"
says this report. at is not only
highly important source of State
and local revenue, but is also
closely related to many other lines
of endeavor which, as group, are
of great Importance to the people
of the State.
"There is without doubt a limit
beyond which it is not feasible to
tax the products Of distillers. There
are not sufficient data to establish
an irrefutable case concerning the
most desirable level for liquor
taxes, though some conclusions can
be made concerning the probable
economic and social effects of fur
Their increases in the tax rates. The
stability of past revenue from
taxes on distilled beverages does
not warrant the assumption on the
part of State officials that gallon
age rates can continue to be in
creased, without having some
influence on the volume of sales
and on the quality of the product,
which might tend to disturb the
future stability Of revenue.
"The increase of consumption
taxes on distilled spirits has a re-
suit peculiar to the product; that
is, the appearance of illicit liquors
accompanied by an army of boot
leggers who pay no taxes and obey
very few laws and are yet in full
competition with legal distillers.
Every increase in price of distilled
spirits to the consumer without a
corresponding increase in purchas-
ing power gives the bootlegger a
better opportunity. There is ample
evidence as to the difficulty of stop
ping the illegal trade once it is well
established. This is surely a situa-
ton where prevention of illegal
operations is clearly the course to
take. The preventative is a tax sys-
tenn which makes a conscious effort
to find the level of tGx-price rela-
tionship which reduces the illicit
trade to a minimum while yielding
proper revenue from a business
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