Senators push to extend tax cuts for breweries, wineries and distilleries
Yahoo Finance’s Brian Sozzi, Myles Udland, Julie Hyman, and Jessica Smith discuss the potential tax cuts for beer.
Video Transcript
JULIE HYMAN: And let's actually stay on the topic of beer for just a moment, because there's a beer tax that is at issue in Washington, DC. Our Jessica Smith is here to talk about this. And this is actually part of potential stimulus, right? It has to do with the beer tax.
JESSICA SMITH: Yes, lawmakers are scrambling to get stimulus done by the end of the year. They're also trying to deal with this tax issue, because at the end of the year, a temporary tax cut for breweries, wineries, and distilleries is set to expire. It was part of the 2017 tax changes.
And take beer, for example. For small brewers, it brought the federal excise tax down to $3.50 a barrel, $3.50 a barrel, from $7 a barrel. So that's a pretty big difference for small brewers. For larger brewers, it's now $16 a barrel compared to $18 a barrel.
The industry says it's already suffering from the pandemic. So Congress should go ahead and make these tax cuts permanent. I talked to the founder of Port City Brewing Company in Alexandria, Virginia, and he says with his savings from the lower tax rate, he was able to start offering some retirement benefits to his full-time employees. If taxes go up, he says he would have to cut back on those benefits. But some smaller brewers might not survive. Let's watch.
- We're in the middle of a pandemic. And you can't go doubling someone's tax rates in the middle of the biggest economic crisis that this country has seen in generations. And just simple logic will tell you that if some of your tax rates double, it's going to be disastrous for your business.
Sales are already hurting. We're doing whatever we can to cut costs, to conserve cash, and to keep the doors open. And if our excise tax rates double overnight, it will absolutely be disastrous for us as well as the thousands of other small craft breweries in the United States.
JESSICA SMITH: There is actually wide bipartisan support to make these lower rates permanent. There's a bill that would do just that. And 77 senators have signed on to it. Just this week, about half the Senate wrote a letter to Republican and Democratic leaders urging them to put this in any government funding bill that comes up in the next week or so. So we'll see if Congress can agree on a bill to keep the government open and if this bill is inside it. Julie.
JULIE HYMAN: And just very quickly, Jess, to linger for a moment on the latter part of that, the overall stimulus bill, what's the latest there?
JESSICA SMITH: Well, there is some growing support for that bipartisan plan that we heard about earlier this week, that $908 billion plan we heard from President-elect Biden in an interview yesterday, saying that it should pass. It should be a down payment, though. There still will be more needed.
But we have to see what Majority Leader McConnell is going to do about this if he ends up backing some version of this plan. And we have to see if President Trump will sign it, as well. That is still unclear. We do expect to get the actual text, the bill behind this plan, some point early next week.
