Alcohol

Tax Reform Would Make Getting Trashed Cheaper

The Senate's tax proposal would cut federal excise taxes on beer, wine, and spirits.

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Beer!
Nejron/Dreamstime

In the Britschgi household, Thanksgiving means a big family meal with copious libations. If Senate Republicans have their way, the libations will be much cheaper.

Amidst its more controversial changes, the Senate's tax reform bill includes a provision slashing taxes and streamlining regulations for the nation's brewers, vintners, and distillers.

"That would have a huge impact on our business," says Julie Verratti, co-founder of Denizens Brewing Company, a craft brewer in Silver Springs, Maryland. "Any type of alleviation is huge for us."

Currently, the feds put a $7 tax on the first 60,000 barrels a brewery produces. This would be rolled back to $3.50. The bill would also cut the tax rate for a brewer's first six million barrels of beer from $18 to $16.

Lowering the federal excise tax on those first 60,000 barrels would save brewers an estimated $37.5 million per year, according to the Brewers Association.

For small breweries like Denizens—which produces roughly 1,700 barrels a year—that would be substantial and welcome tax relief.

Verratti estimates that halving the federal excise tax would save her business about $6,000 a year, no insignificant sum for a small business. "That's buying kegs, that's buying tanks, that's paying our employees higher wages," she tells Reason.

Distilleries also have stiff tax cuts coming their way.

Right now, makers of the strong stuff pay a federal excise tax of $13.50 on every gallon of distilled spirits. The Senate bill would cut this to $2.70 per gallon for the first 100,000 gallons, and then $13.34 for every subsequent gallon up to 22.1 million gallons.

Winemakers would see some of the rates they pay pruned back as well. Low-alcohol sparkling wines and meads would see their taxes cut by nearly 70 percent, from $3.30 down to $1.07.

The bill also includes some welcome regulatory changes, such as simplified bookkeeping requirement and easier tax-free transportation of booze between breweries and distilleries, a change that would make collaboration on new brews and batches easier.

These changes were initially submitted by Sens. Ron Wyden (D-Ore.) and Roy Blunt (R-Mo.) as a stand-alone alcohol reform bill back in January. Proving that nothing brings people together like a stiff drink, their Craft Modernization and Tax Reform Act had attracted 46 co-sponsors by the summer recess. A companion bill in the House chalked up 252 co-sponsors by the same time.

The bill was rolled into the Senate's tax reform legislation earlier this month.

An ideal federal tax code would be one of broad bases and low rates. That would preclude a bizarre web of differing beverage tax rates depending on type, alcohol content, and, in the case of wine, level of carbonization. These do not go away under the Senate tax bill. But as long as libertarian dreams of a flat tax, fair tax, or even no taxes are a far-off fantasy, cheaper booze sounds like a pretty good stopgap measure.

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  1. In the Britschgi household…

    Someone’s setting himself up for abuse in the comments section.

    1. I bet Britches drinks one beer and then won’t shut up talking about how drunk he is.

      1. +1 I’m so wasted

        1. +1 Guys, I’m so wasted

          1. +1 Guys

            1. +1 Guys

              1. +1 Hey Guys, I’m so wasted right now

                1. Don’t forget to bring a towel.

      2. I bet Britches pounds like eight whiskeys and then tells everyone to get the fuck out. His family hasn’t even made it to the pie in over a decade.

        1. That sounds more like Mike Riggs honestly. And it’s not even from being tired after running down a wild turkey that morning and roasting it with insults, but just because he wants some quiet while he smokes an acre of weed to contemplate what he is giving thanks for this year.

          1. No, Mike Riggs has no family. He spends Thanksgiving Day in a cave in the woods with a bear, and that night, he eats the bear.

    2. Finally, the libatarian moment.

  2. “That’s buying kegs, that’s buying tanks, that’s paying our employees higher wages,” she tells Reason.

    Instead of handing $6000 of government money to big businesses like Denizens Brewing Company, that last one could be accomplished if the GOP would simply raise the minimum wage.

  3. The bill was rolled into the Senate’s tax reform legislation earlier this month.

    Thus assuring its doom.

  4. The Senate’s tax proposal would cut federal excise taxes on beer, wine, and spirits.

    That’s good. My recently acquired mortgage is really cutting in to my beer/wine budget.

  5. Now, if I could just buy liquor from a private business.

  6. Right now, makers of the strong stuff pay a federal excise tax of $13.50 on every gallon of distilled spirits. The Senate bill would cut this to $2.70 per gallon for the first 100,000 gallons…

    (To be precise, FET is $13.50 per proof-gallon, not a standard volumetric gallon.)

    My company has a DSP, and this would be huge. FET frequently accounts for more than 50% of the cost to produce a 750mL bottle of high-proof spirits.

    Also, I’m not holding my breath.

  7. Why at the end does it talk only of libertarian dreams of a flat tax, a fair tax or no tax?

    The article speaks of different excise taxes on alcohol. What is an excise tax? Why don’t more libertarian conservative establishment types delve more into the nature of taxation and what is the federal jurisdiction over taxes?

    Excise taxes are one of the most plenary of taxes, and exhibits one of the few federal intrusions into the States. An excise tax can be laid on the manufacture, distribution and sale of certain commodities.

    Furthermore, certain individuals are held liable for the tax. They can be government employees or private “withholding agents”

    Now it becomes stickier when we discuss the US INDIVIDUAL INCOME TAX. That tax is an excise tax as well. But nowhere is this excise tax explicitly laid on American workers, nor is any worker made liable for the tax. WHY?

    In NFIB V Sebelius, Judge Roberts spend a couple of pages reviewing Supreme Court decisions on taxes. He said the the Federal Government can reach into the states and tax those who profit from a federal license. He made no comment on ordinary workers
    Why can’t the libertarian conservative establishmen broaden the consensus OVERTON WINDOW on what libs can discuss about taxes to recognize that many of us dream of Constitutionally Limited taxation (TAX HONESTY) and not just a fair, flat or no tax? http://www.losthorizons.com

  8. Also, I get the impression the dudes in that picture are watching election returns or possibly the Golden Globes. Definitely not football.

    1. They are suspiciously well-groomed.

  9. This could definitely help poor Welchie boy offset that few extra bucks he might have to pay due to the possible rescinding of the blue state property tax subsidy, except he only drinks Shirley Temples and Sarsparillas.

  10. Currently, the feds put a $7 tax on the first 60,000 barrels a brewery produces.

    Really that’s not too bad.

    Oh, you mean per barrel. I think.

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