Is Now The Best Time for Tax Reductions for Napa Wineries?

So, I’ve been taken to task by a friend who has followed this blog for some time as well as my social media posts. I’m reproducing his letter here because he is correct—I’ve not spoken up one way or another about the tax break for wineries that was folded into the federal Tax Reform measure, which I do oppose. The writer is referring to this.

Dear Tom,

I’ve corresponded with you before on other issues. I wanted to reach out to you today because I’m a little dismayed that you have not weighed in the on the federal excise tax credit for wineries that has been dropped into the tax reform bill.

I’ve seen you opine on the problems that are created by income and wealth inequality. I’ve seen you oppose the tax reform package on the grounds that now is about the worst time to lower taxes. So where is the indignation when it comes to your industry getting a little treat in the tax reform package? Why not speak out on this kind of giveaway?

This excise tax credit amounts to no more than a transfer of federal revenue to wineries (and brewers and distillers too). Is it so critical that wineries get a reduction in the excise taxes they pay that we take funds out of the federal coffers that otherwise might be used to reduce the federal debt, shore up Medicare or social security, or assure healthcare is affordable for low-income Americans? Exactly how many Napa Valley winery owners are in such dire straights that we need to take money that could be used to help folks near poverty and give it back to the Napa Valley vintners?

The measure of a man is on display when he is willing to stand up for what is right, rather than see his own pockets and his friends’ pockets lined. I’m disappointed in you, Tom.

The writer asks good questions that deserve answers I don’t currently have. And it’s true that I personally oppose the recent tax reduction legislation on the grounds that now isn’t the best time to exacerbate the extraordinary wealth inequality that festers and contributes mightily to a reduction in civility and the health of the Republic.

One thing I do know is that the reduction in federal excise taxes from which wineries (including those in Napa Valley) benefit will in no way reduce the price consumers pay for wine. The Wine Institute estimates that a 50,000 case winery will save an estimated $21,000 annually due to the Federal Excise Tax reduction (probably more if they make much wine over 14% alcohol). This $21,000 could help pay for additional equipment, offset the cost of hiring a new employee, help pay for healthcare costs for employees or fund a somewhat better set of vacations for the owner. We’ll see.

Posted In: Wine Business


3 Responses

  1. Steve - December 20, 2017

    Someone sent someone to congress/senate to lobby for this bill that aids the winery business. Who sponsored and paid for this inclusion in the tax bill. Today northing is done without lobbyist being paid and their contributions an elected official. Nothing is free. When we like the lobbying it is democracy at work, when we don’t like the results it is a corrupt system.Teachers, unions, Planned Parenthood, churches, realtors, football teams, three tier distributors and wineries. The rage should be directed at the group who hired lobbyist to get the deal. You generally get what you pay for. Boycott wineries seems to be the answer says some groups.

  2. Bill McIver - December 20, 2017

    This is a gross giveaway to the wealthy, especially wealthy vintners. Sandra and I started Matanzas Creek on a shoestring, but taxes never affected any business decision we ever made.If one is just starting up a winery, it will be up to ten years before a profit, but there are not enough fine wine grapes in the world, so don’t worry, you will make money because banks, farm credit, etc will be happy to lend you money (if, of course, one is operating and managing properly, and based on my experience, you will start making money after you’ve paid the cost of inventory for a decade or so, and your tax burden will never be an issue. This tax bill is was passed primarily for President Trump and his cronies, no Napa or Sonoma vintner needs it, and certainly not Gallo who undoubtedly got the Republican’s ear for this tax break, just like they did when they got the lion’s share of MPP funds back in the 1990s for international marketing US wine.

  3. Brian - December 21, 2017

    I’m disappointed they didn’t change the tax on sparkling wines (true sparkling wine, not the minor adjustment to tax on slightly higher carbonation levels). The change in the excise tax for table wines was unnecessary while I feel that an adjustment to the tax on sparkling wine would have had an impact on the category and promoted some growth there.

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