Beer, wine and cider aficionados could be lifting a glass to the Republican-crafted tax bill.
One potential tweak would temporarily cut federal taxes on small craft beverages, delivering what brewers, wineries and distillers say would be a boost to their burgeoning industries.
The measure isn't in the Senate tax bill that senators are writing this week, but a group of Republican senators has proposed an amendment that would cut the taxes on barrels of beer and wine for two years.
The change would benefit both large and small operations, say lobbyists for beer, wine and distilled spirits, who note that every congressional district in the United States has a brewery, winery, distillery, importer or an industry supplier.
"These businesses are often cornerstones of their communities," the Beer Institute, Brewers Association, Wine Institute, WineAmerica, Distilled Spirits Council and American Craft Spirits Association said in a letter this week to Senate Finance Committee chairman Sen. Orrin Hatch, R-Utah. "Unfortunately, outdated regulations and tax laws impede the growth of these individual businesses."
It was unclear the committee would hold a vote on the proposal. Republicans are eager to finish work on their tax plan in the House and Senate and appoint a committee to reconcile the differences between the chambers. The House is expected to vote on its bill on Thursday. The Finance Committee is hoping to finish writing its version this week.
The amendment’s call for an increased tax credit for small wine producers is drawing opposition from the conservative activist groups, Americans for Prosperity and Freedom Partners, which included it in a list of amendments they say “would award corporate welfare to special interests.”
In a letter to Hatch, the groups, backed by the industrialist Koch brothers, urged lawmakers to ignore the special carve-outs.
“Every dollar that goes to propping up special interests is a dollar that doesn’t go to lowering rates and easing the tax burden for ordinary Americans,” the letter says.
The amendment calls for a temporary, two-year reduction in the federal tax. The committee's top Democrat, Sen. Ron Wyden, D-Ore., who has co-chaired the Senate Bipartisan Small Brewers Caucus, introduced legislation in January that would make the cut permanent. Similar legislation has been introduced since 2015, but has never passed.
Democrats are largely united in their opposition to the tax bill and Wyden has introduced amendments likely to be considered by Republicans as “hostile” to their legislation, including one that would require presidents and presidential nominees to make their tax returns publicly available.
If the beer and wine provision makes it into a final tax bill, it would cut the federal excise tax on small beer brewers, those who produce less than 2 million barrels a year, from $7 to $3.50 for the first 60,000 barrels produced. The overall per barrel tax would drop from $18 to $16.
For vintners, the bill would increase the amount of a small wine producer tax credit and would expand the number of producers who qualify for the tax credit. There would also be an adjustment for hard cider.
A similar break would apply to distilled spirits, which are taxed at a rate of $13.34 per proof gallon. Distillers would pay a $2.70 per proof gallon rate for the first 100,000 gallons they produce or import.
The push for a permanent fix has wide bipartisan support. Wyden has 54 co-sponsors for his bill and its House companion has 296 cosponsors.
The industry promises the changes would create jobs and boost tourism in states with breweries, wineries and distilleries.
“Passing this much-needed tax reform legislation will spur further investment and job creation by reducing the excessive tax burden on distillers small and large,” Distilled Spirits Council President & CEO Kraig R. Naasz said last month as the tax bill passed the 50-senator sponsor mark.