DRIPPING SPRINGS, Texas – Two years ago, President Donald Trump signed into law major tax cuts and overhauled the tax code for the first time in thirty years, the Tax Cuts and Jobs Act of 2017.
- Currently proof beer is taxed at the same rate as beer and wine
- Local distillers worried if tax act not extended, they will have cost increases
- Currently two bills stalling in Congress
As part of that bill, a measure was added called the Craft Beverage Modernization and Tax Reform Act.
That provision lowers federal excise tax rates by more than $10 for every proof gallon— bringing those tax rates down to the same level as beer and wine producers.
“We were never asking for some big cut. We were asking just for parity with other alcohol manufacturers,” said Nate Powell of Treaty Oak Distilling in Dripping Springs.
Advocates of the extension are hoping for a permanent tax cut instead of requiring Congress to reauthorize it every other year.
As it stands now, the provision will expire at the end of this year as lawmakers are gridlocked over other matters.
“You know they’re all about to come up on their break they’re all focused on impeachment right now so and not helping us out— not helping out Americans,” said Powell.
For distillers like Powell the cost of barrels, grains, and labor add up.
“And when we’re talking about adding on maybe $200,000 - $300,000 in additional taxes to pay— one of those is going to suffer,” he said.
That means headaches down the line in terms of production.
“Instead of producing 10 barrels five days a week, you cut it down to four. Which our grain supplier will—you know—that’s a 20% decrease in my grain for the next six months or the next year until we can get this bill through,” he said.
There are two bills stalling in Congress, even though they boast bipartisan support.
“It’s got support almost split down the middle. We’ve got hundreds of people signed onto it. In Texas, we have about half of our congressmen signed on and supporting it. Roger Williams, our district congressman, has been instrumental. Our first bill will come up January 15, we pay twice a month—so if it’s not done this year—January 15, right around the corner, we’ll have that tax bill increase 400 percent” he said.
A bill in the House has over 300 co-sponsors, including Congressman Roger Williams.
Over 70 co-sponsors have signed on to the Senate’s version of the bill—Senators Ted Cruz and John Cornyn are not listed as sponsors.