Whiskey Economics

I am not much of a whiskey drinker. In fact, I don't drink whiskey at all. But this post only touches on whiskey tangentially. This is not a drinking discussion but one of economics. Jack Daniel's is distilled in Lynchburg, Tennessee, a town of less than 6000 people located in the south-central part of the state. But is it possible that the venerable old distillery could be leaving the state for Michigan?

According to one story, Speaker of the Michigan House, Jase Bolger, has written a letter to Daniel's GM Tommy Beam welcoming him to relocate to the great state of Michigan. There he will find everything he needs to operate the famed distillery: fresh water, a willing labor pool, and, of course, a business-friendly tax code. Now we are getting to the crux of the matter.

Lynchburg is located in Moore County. Apparently, county officials are discussing whether or not to levy a new $10/barrel tax on Jack Daniel's whiskey. The measure could come up for a vote as soon as next March. Now, I don't think it has a prayer of passing. I assume the good folk of Lynchburg are a little smarter than that. Michigan doesn't need to roll out the red carpet just yet. But what fascinates me is some of the discussion on this issue by a concerned citizen, one Charles Rogers.

Chuck thinks that Jack has built an image around the town of Lynchburg. Therefore, “We are entitled to more money from the only industry in the county.” Excuse me? Because this is the only industry in the county you are entitled to steal more of their money?!? Isn't Jack paying taxes already? Don't they employ 365 workers in your county? That is 365 people with productive jobs, supporting families, buying groceries, cars, houses, insurance, utilities, and all the other expenses it takes to live in Lynchburg. Oh, yeah, and they're paying taxes.

This highlights two gross errors that the left continues to perpetrate on the rest of society. First is the entitlement mentality. What entitles you to more of Jack's money? Nothing is the correct answer. Any other is a bunch of crap that spring from your basic misunderstanding of how economics actually work. And that leads us to the second: no business ever pays taxes. Not just Jack, mind you, but no business of any kind ever pays taxes. Ever. Businesses are not bottomless wells of revenue for governing authorities. That money has to come from somewhere. Taxes are a cost of doing business. As such they must be recouped in the cost of the product or service sold. This is done by raising the price for which it is sold. Only end consumers ever pay taxes. Every tax increase is a hit to the consumer in some way. If you raise Jack's taxes, Jack has to raise the price of its whiskey. That means that John Doe in Moore County must pay more for his bottle of Jack. And that means he has less money to spend on other stuff to stimulate the economy. Like the gas he needs to drive outside of Moore county to buy his Jack since Moore is a dry county.

Charles Rogers and his ilk, should they have their way, can say goodbye to the only industry in the county. If they succeed, Michigan will have the red carpet ready.