In 1982 U.S. businesses will spend over $10 billion (12 percent of the total retail alcohol market) on alcoholic beverages which will be consumed by top executives, professionals, and other white-collar employees in a variety of business and personal settings. The Internal Revenue Service, through a series of vaguely defined tax deduction categories, permits these expenditures to be deducted from corporate and individual taxes as “ordinary and necessary” to the conduct of business, costing U.S. taxpayers between $3 and $5 billion annually in lost tax receipts. This article examines the scope and legal underpinnings of the IRS tax expenditure policy; its impact on drinking habits and drinking problems among the nation's business and professional elite; the arguments for permitting the subsidization of corporate drinking habits; reform measures that are available to policymakers; and the barriers to effective implementation.

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