Resisting the shot: Why tax credits for the liquor industry don’t serve us well


By Nick Moeller

Guest columnist

Ohio is an active market for craft breweries such as ours – Moeller Brew Barn, based in Maria Stein with additional locations in Dayton and Troy. More than 430 craft breweries operate across Ohio and yet, according to the nationwide Brewer’s Association, the state’s craft beer sales are down for the first time in years. Craft brewers here, and nationwide, continue to contend with both market and regulatory obstacles that make it more difficult to enjoy long-term success.

While our state lawmakers in Columbus are engaged with us on a variety of critical regulatory and workforce issues, an equally concerning battle is being waged in DC. Unfortunately, the federal government is kneeling to an aggressive liquor lobby in an effort to favor large, multinational liquor companies at the expense of American business and consumers. Most offensive is the strategy of this lobby to make American taxpayers foot the bill for these foreign companies. In essence, big liquor is gaming the convoluted U.S. tax code at the expense of working Americans.

This is an insidious effort that many Americans don’t see. Through congressional bills (S.1781 and H.R. 4073) hard liquor special interest groups want to expand trade and tax policy to create a zero percent effective tax rate for multi-national liquor companies that import certain foreign-produced spirits products. The lobby plans to attach these bills to the omnibus package and create the ultimate earmark for hard liquor. Again, this would happen at the expense of American workers and small businesses in our domestic alcohol industry.

This isn’t the first time that Big Liquor has lobbied for special treatment, since they have received many generous tax breaks over time. Some of these tax loopholes include the “rum cover-over” and the “5010-flavor” credit. The rum cover-over rebates a substantial portion of the excise taxes paid by U.S. territories which, sadly, primarily feather the pockets of liquor companies that contract with the territory rather than programs for infrastructure and pensions. The IRC 5010 tax credit allows a tax credit for liquor diluted with wine and other flavorings. Liquor companies pocket the savings, charging consumers full price for a bottle of liquor made with up to 47.5% wine or flavoring.

Clearly, S.1781 and H.R. 4073 represent wasteful giveaway earmarks that would only benefit a handful of global hard liquor companies. The American people, here in Ohio and across the country, deserve to know which multinational big liquor companies would benefit from the Congressional earmark process. Ohio’s craft beer industry comprises hard-working local workers and their families and a thriving small business marketplace. The industry welcomes the active support of our state legislature to help this industry grow. We do not need the federal government to obstruct this growth by favoring large foreign liquor companies.

Congress should OPPOSE S.1781 and H.R.4073.

Nick Moeller is the Founder of Moeller Brew Barn, with brewery-restaurant businesses in Maria Stein, Troy, and Dayton, Ohio. Nick serves as a Board Member at the Grand Lake Region Visitors Center, and also serves on the Advisory Board of The Ohio State University at Lima.

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