AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 61 – Economics

 

Direct Ship Blowout: How the Supreme Court’s Granholm Decision
Has Led to A Flood of Non-Taxed Wine Shipments

John Dunham, Victor Fung Eng and Peter Ronga

Abstract

This paper seeks to address the realized decline of tax revenue while the gross revenue sales of wine through direct shipping has increased. The Supreme Court ruling in Granholm v. Heald rendered opinions against state restrictions on out-of-state winery shipments direct to consumers on the basis that the structuring of the state tax policy violated Commerce Clause provisions and blocked ease of entrance into the state market. Based on the model, the interstate sale of wine in the United States rose from 6.2 percent of the market to about 10.4 percent. The evidence presented in the interstate demand model used in this analysis confirms declining tax revenue in opposition to the Court’s conclusions.

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