U.S. Rep. Greg Walden, R-Hood River, said Friday he favors extending the two-year tax break given brewers, winemakers and distillers in the federal tax bill signed into law in December.
The Craft Beverage Modernization and Tax Reform Act slices in half the federal excise tax on beer for the smallest brewers, those that produce less than 2 million barrels of beer annually. That encompasses most Oregon-based brewers, from Deschutes Brewery, of Bend, whose production brewery turned out more than 60,000 taxable barrels of beer last year, to MadCow Brewing Co., of Portland, which produced less than five.
Walden, who met with Deschutes Brewery’s president and CEO, Michael LaLonde, and founder Gary Fish on Friday, said the tax cut for brewers, like the tax cut for middle-income taxpayers in the encompassing bill, should live beyond the terms called for in the measure.
“Let’s extend it beyond that, I’m all for it,” he said. “And the same for the individual tax rates that expire in 2027.”
That would suit Deschutes Brewery, which is building a new brewery in Roanoke, Virginia, that’s not scheduled to start production until 2021.
“We only have two years on this excise tax; hopefully it gets extended because we’re able to demonstrate the value that it brings,” Fish said.
The craft beverage act reduces the federal excise tax from $7 per barrel to $3.50 per barrel on the first 60,000 barrels from brewers producing fewer than 2 million barrels annually. The act, folded into the massive Tax Cuts and Jobs Act signed into law by President Donald Trump, also reduces to $16 from $18 the excise tax paid on the first 6 million barrels produced by all other brewers and beer importers. Brewers and importers selling more than 6 million barrels will continue to pay $18 per barrel.
The overall tax package gives small businesses like beverage makers a break on taxes paid on capital investments. Rather than claim those investments as depreciable assets in increasing deductions over time, businesses can claim them in the same year they’re made.
As for the craft-beverage tax cut, U.S. Sen. Ron Wyden first introduced the Senate version in 2015, where it stalled, according to www.congress.gov. That version did not include the two-year sunset. Neither did the identical House version introduced by U.S. Rep. Erik Paulsen, a Minnesota Republican. Walden was a co-sponsor.
Neither did the 2017 version of Wyden’s bill, co-sponsored by Sen. Roy Blunt, R-Missouri, include an expiration date. The bill was amended, however, to include the sunset provision by the Republican majority as part of the overall tax bill.
“This short-term version is tax reform done wrong and a major lost opportunity,” Wyden said during a Senate Finance Committee hearing in November.
Wyden said the shortened version would expire before the U.S. Treasury Department could write the regulations to implement it and would force beverage makers to return every year or two, “groveling” for another extension. Wyden voted against the Tax Cuts and Jobs Act, including the amended version of his and Blunt’s craft beverage bill.
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