I had an op-ed in the Wall Street Journal earlier this week about the effects of both tax breaks and the legalization of homebrewing on the American craft-beer movement. One of the more interesting responses to my piece has come via the Journal‘s Comments section. I quote in its entirety a satire (if that’s the right term here) of my piece as it pertains to distilling (a.k.a. making craft liquor).
Today there are more than 2,300 distilleries in the United States—where spirit production is second only to China’s—but it wasn’t long ago that American spirit was an international punch line. Nearly all domestic spirit was made by a handful of distilleries. As recently as 35 years ago, there were fewer than 50 distilleries in the whole country, and the fastest-growing type of American spirit was bourbon.
The story of the U.S. ascent to the top tier of world spirit began in the late 2010s, when distilling was liberated from government taxation and regulation that had held it back since Prohibition.
In 2013, King was determined to change things. In an impressive feat of bridge-building, he lined up support. Unions called in favors; the big distillery owners wrote personal checks. These owners, whose excise taxes would remain the same, figured that by helping their smaller brethren, they would ultimately help themselves by inspiring more spirit consumption in an American alcohol market suddenly awash with beers.
Distiller Peter – lobbied President Barack Obama, to sign the bill that King’s efforts finally steered through Congress. H.R. 3605 cut the federal excise tax on spirit to $17 from $19 per barrel on the first 60,000 barrels produced, so long as a distillery produced no more than two million barrels annually. (There were few distilleries that did, which was another reason Peter’s association went to bat for the tax cut.)
The tax cut unleashed a revolution in American distilling. Hundreds of smaller distilleries began to open across the country selling what came to be called craft spirit. But as significant as the numbers was the rise of American distillers and consumers as the industry’s tastemakers. Nowadays, craft-spirit startups in places like France, Italy and Japan are less likely to look for inspiration in the traditional liquors of Europe than in the vodkas of California and the smooth whiskeys of New England.
The repeal of the prohibition of home brewing in 1978 legalized home beermaking, but, because of an oversight, did not legalize home-distilling of spirit. Stores that sold supplies for beermaking also sold supplies for making spirit at home, and the government did little to enforce the anti-home-distilling law.
Still, the air of illegality discouraged many who might have taken up home-distilling, and importers were reluctant to bring home-distilling supplies from Europe. Enthusiasts in the U.S. kept their interests underground, usually sharing information only with a small circle of other home distillers. Who knew when the government might start enforcing the home-distilling prohibition?
Gradually, though, the secretive home distillers grew bolder. In the 2010’s, home-distilling clubs joined with trade groups representing the beermaking shops that sold home-distilling supplies. They lobbied Sen. Alan to introduce legislation legalizing home-distilling at the federal level.
Alan introduced legislation that was reconciled with a House bill in August 2014. President Obama signed the law that October, and it took effect the following February. Home-distilling of up to 200 gallons a year per household was suddenly permitted.
Following the federal example, state legislatures also began rewriting their bans on home-distilling, and it is legal now in every state. The result: Home-distilling took off, helping to spur the movement toward craft spirit that had been touched off by the spirit tax reduction. The spirit industry swelled in the 2010s and 2020s, producing thousands of jobs and tens of millions of dollars in annual tax revenue.
The rise of American spirit wasn’t an accident. It was spurred by efforts to cut taxes and regulation that unleashed entrepreneurship. Too bad Washington doesn’t raise a toast to that idea more often.
Finally, for the heck of it and somewhat related, here’s a YouTube of the late, great George Jones’ “White Lightning.”
· Lower Taxes Tapped a Beer Revolution [WSJ]
· Craft Beer and Taxes and Deregulation [TomAcitelli.com]
TomAcitelli.com 