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PROPOSAL TO REDUCE FEDERAL EXCISE TAXES FOR SMALL PRODUCERS


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On the numbers front, the TTB has some very broad proof-gallon numbers on its web site. Our previous numbers were fairly close to the mark, but failed to take into account non-taxed withdrawals for exports and military sales.

Here's what I managed to pulled out for us to analyze:

SPIRITS WITHDRAWALS

..................2006...................2007.............Trailing 12 Months

................Jul-Dec...............Jan-Jun............Jul 2006 - Jun 2007

Taxable.....128,984,087........134,949,392.....263,933,479.......72%

Tax Free......50,973,041.........53,153,677.....104,126,718.......28%

Total..........179,957,128.......188,103,069.....368,060,197

Could someone run a quick analysis on how much revenue small producers add to the pot based on the above (most current TTB) figures?

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Greetings all:

I work with a law firm with decades of alcohol beverage licensing/permitting experience, primarily in the wine sector, and passed the following question up to the lead attorney (30+yrs of licensing/permitting experience):

"My compatriots in the artisan spirits world are putting together a petition/position document urging Federal legislators to encourage TTB to provide a reduced tax rate for small distillers (similar to what is in place for small wine producers). What are your thoughts on the likelihood of TTB entertaining such a proposition?"

His response:

"Hard sell. Worth a try, but I would bet against it. DISCUS (large distillers) will oppose, and probably vintners and brewers too. Maybe Fritz Maytag and Jorg Rupf would get behind it, which would help."

I am new to this discussion, and realize that the issue of resistance from others in the industry may have already been covered ad nauseum, but has anyone reached out to these two 'elder statesmen" of the American artisan/craft/micro-distilling?

As this attorney was instrumental in getting the small winery tax schedule passed, I have asked him for more information on how they went about placating the larger wineries, and will pass on any useful information.

Salute e Pace,

Giorgio

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"Hard sell. Worth a try, but I would bet against it. DISCUS (large distillers) will oppose, and probably vintners and brewers too. Maybe Fritz Maytag and Jorg Rupf would get behind it, which would help."

Jorg is in (see list) and I've left a msg for Fritz.

Had a call on this subject with an a Washington DC attorney (lots of industry clients/lobbying) who spotted our discussion and wanted to weigh in with basically the same concerns -- that DISCUS and leaders in beer/wine would not make passing our proposal easy. Can appreciate DISCUS's concerns, but am not sure on what basis would brewers and vintners oppose small spirits makers gaining the same reduced tax structure as small makers in their own industries.

He also mentioned that there are rumors to raise excise taxes in 2009. If that's the case, then our timing for trying to create a lower tier may be ideal. Lowering taxes by an insignificant amount for the little guys will make passing increases for larger producers much more palatable for most elected officials, especially as most now have one or more spirits producers in their own states.

What do other supporters of this proposal think?

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I think that the proposed bill should be written as discussed, but transmitted with an introductory letter that frames our argument from the perspective of competitive disadvantage. We can do this without pointing fingers as we are a 'fairly' young industry by claiming a lack of advocacy during the period when small brewers and vintners were lobbying for themselves. We should enjoy an equal status from a tax perspective with our lower production peers, and the federal government shouldn't impose more restrictions on one beverage alcohol producing group than another simply because of a historic lack of advocacy...

Just my .02 USD

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As we get ready to take our proposal to elected officials, thought you'd like to see what proposals to increase alcohol excise taxes look like. This one was circulated in early 2007 by the Center for Science in the Public Interest. (Here's a link to the pdf.)

ATTENTION: TAX AND HEALTH LAs January 23, 2007

RAISE ALCOHOLIC-BEVERAGE TAXES, DON’T LOWER THEM IN THE 110TH CONGRESS

Dear Member of Congress:

As organizations concerned with public health and safety, alcohol and other drug abuse prevention and treatment, fiscal responsibility, and the well being of young people and families, we strongly urge the 110th Congress to seriously consider a long over-due alcohol tax increase to achieve budgetary goals and help pay for the prevention and treatment of alcohol-related problems. We correspondingly urge you to refrain from co-sponsoring alcoholic-beverage industry-backed legislation to reduce alcohol excise taxes, and to reject alcoholic-beverage industry appeals to include such cuts in any new tax proposals under consideration in the 110th Congress.

Congress has many reasons to INCREASE (not lower) federal excise taxes on alcoholic beverages:

An increase in federal alcohol excise taxes is long overdue. In the last 50 years, effective tax rates on alcoholic beverages have fallen dramatically with inflation. As prices rise, the relative importance of the taxes shrinks, unless Congress raises them. For example, had the beer tax merely kept up with inflation, it would be more than three times today’s rate of $18 per barrel; the liquor tax would be more than five times its current rate of $13.50 per proof gallon. In fact, beer and wine taxes have been raised only once in the past 55 years, liquor taxes only twice. As a result, tax revenues that accounted for 12 percent of the sales of alcohol in 1980 now amount to only 7 percent of total sales. The result is a de facto subsidy on drinking and extra profits for alcohol manufacturers at the expense of taxpayers.

An increase in federal alcohol excise taxes is justified. Current alcohol-tax revenues (some $8.9 billion at federal level) don’t come close to offsetting the staggering public health and safety costs of alcohol consumption – estimated at $184 billion per year, including $62 billion per year for the costs of underage drinking alone. Recognizing that cheap alcohol puts it in easier reach of kids, the National Academy of Sciences recommended alcohol tax increases, especially on beer. That call was echoed last spring in a petition to Congress from 60 of America's leading economists, notably including 4 Nobel Prize winners, who agreed that an alcohol tax increase is overdue and well-justified.

An increase in federal alcohol excise taxes is popular, compared with cutting critical social programs. Most Americans would barely notice a tax change, because they either don’t drink (35%) or drink sparingly (55%). A tax increase would affect primarily the minority (20%) of drinkers who consume some 85% of all the alcohol. In a national survey, nearly 82 percent of adults favored an increase of five cents per drink in the tax on beer, wine, or liquor to pay for programs to prevent minors from drinking and to increase the availability of alcohol treatment programs. In surveys on alcohol excise taxes conducted in several states, results have consistently shown that between 76 and 80 percent of respondents believe that increasing alcohol taxes is “good” or “acceptable,” or that they support an increase in alcohol excise taxes.

An increase in federal alcohol excise taxes is fair. A tax increase on alcoholic beverages will not unduly burden low-income people, who drink at lower rates than those with higher incomes. For example, according to Adams Beer Report, 33.7% of consumers with incomes greater than $75,000 drink regular beer, compared to an average of only 25.7% of consumers with incomes less than $40,000. Only 22% of consumers with incomes less than $20,000 drink regular beer. Beer drinkers are over-represented among those in higher income categories. Sixty percent of beer consumers have incomes above $40,000, compared to only 53.4% of the entire adult population at that income level.

Even with the last increase in 1991 (under the Revenue Reconciliation Act of 1990), the relative price of beer has fallen by more than 25 percent relative to the Consumer Price Index, and the price of liquor has fallen almost 50 percent over the past five decades. Meanwhile, alcohol sales have flourished. Beer sales have grown steadily over the past 15 years, from $44.6 billion in 1989 to nearly $82.4 billion in 2004. In the same period, spirits sales soared more than $20 billion and wine sales grew by $11.4 billion.

A 2005 report of the Congressional Budget Office estimated that modestly increasing and reforming alcohol taxes could generate almost $27 billion in new revenue over five years. Please support a seriously overdue and well-justified increase in the federal excise tax on alcoholic beverages, and resist alcohol-industry appeals to lower them. Such an increase is historically over-due, justified, popular, fair – and the right thing to do. If we can be of any assistance to you on this important issue, please contact Kimberly Miller of the Center for Science in the Public Interest at (202) 777-8338. Thank you for your consideration.

Sincerely,

Alcohol & Addictions Resource Center, NCADD (South Bend, IN)

Alcohol/Drug Council of North Carolina

Alpha Project Casa Raphael (Vista, CA)

American College Health Association

American College of Preventative Medicine

American Public Health Association

Center Point, Inc. (San Rafael, CA)

Center for Science in the Public Interest

Chautauqua Alcoholism & Substance Abuse Council, Inc. (Jamestown, NY)

Consumer Federation of America

Council on Addictions of New York State, NCADD (Cooperstown, NY)

Council on Alcoholism and Drug Abuse of Sullivan County, Inc. (Monticello, NY)

C.U.R.A. Incorporated (Fremont, CA)

DePaul Addiction Services, NCADD Affiliate (Rochester, NY)

Employee & Family Resources – NCADD (Des Moines, IA)

Erie County Drug and Alcohol Coalition (Pennsylvania)

Ethics & Religious Liberty Commission, Southern Baptist Convention

Faces & Voices of Recovery

Focus on Community, NCADD (Racine, WI)

Gateway Foundation, Corrections Management Office (Houston, TX)

General Board of Church and Society of the United Methodist Church

Help/Project Samaritan (Bronx, NY)

Holding Associates (New York, NY)

INSPIREHealth.org (Scottsdale, AZ)

Legal Action Center

Maine Association of Substance Abuse Programs (Augusta, Maine)

Marin Institute

Mountain Council on Alcohol and Drug Dependence (Asheville, NC)

NAADAC, The Association for Addiction Professionals

National Association of Pediatric Nurse Practitioners (NAPNAP)

National Council on Alcoholism and Drug Dependence – Juneau, AK

National Council on Alcoholism and Drug Dependence – Phoenix, AZ

National Council on Alcoholism and Drug Dependence – San Diego, CA

National Council on Alcoholism and Drug Dependence, National Office

National Council on Alcoholism and Drug Dependence - Robbinsville, NJ

New York Therapeutic Communities (New York NY)

Oasis Behavioral Health Services, L.L.C. (Barboursville, WV)

NOVA Inc., (Phoenix, AZ)

Samaritan Village,Inc. (Briarville, NY)

Security On Campus, Inc.

Smokefree Pennsylvania (Pittsburgh, PA)

Society for Adolescent Medicine

State Associations of Addiction Services (SAAS)

Swain Recovery Center (Black Mountain, NC)

The Alcoholism & Drug Abuse Council (Goshen, NY)

The National Center on Addiction and Substance Abuse at Columbia University

The New Mexico Alcohol Issues Consortium

Wisconsin Prevention Network

Youth Leadership Institute

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Just made it to 60 producers who've signed on through this board or I've spoken with by phone (in parentheses).

Current Producers

1. Modern Spirits LLC 168 W Pomona Ave, Monrovia, CA

2. Colorado Gold LLC, Cedaredge, CO

3. Tuthilltown Spirits, Gardiner, NY

4. Dry Fly Distilling, Spokane, WA

5. Ellensburg Distillery LLC Ellensburg, WA

6. Dynamic Alambic Artisan Distillers LLC Mattawa, WA

7. Great Lakes Distillery LLC, Milwaukee, WI

8. Drum Circle Distilling, Sarasota, FL

9. Grand Traverse Distillery, Traverse City, MI

10. Mystic Mountain Distillery, Larkspur, CO

11. Pacific Distillery LLC, Woodinville, WA

12. Delaware Phoenix Distillery, Walton, NY

13. Heartland Distillers, Fishers, IN

14. Fat Dog Spirits, Tampa, FL

15. Harvest Spirits LLC, Valatie, NY

16. Cascade Peak Spirits, Ashland, OR

17. New Holland Brewing Co. and Artisan Spirits, Holland, MI

18. Newport Distilling Company, Newport, RI

19. 45th Parallel Spirits LLC. New Richmond, WI

20. Gnostalgic Spirits, Ltd., Portland, OR

21. Blackwater Distilling Inc., Annapolis, MD

22. Cold Smoke Distillery Inc., Bozeman, MT

23. The Solas Distillery, Omaha, NE

24. Parched Group LLC, Richmond, VA

25. AEppelTreow Winery, Burlington, WI

26. Leopold Bros. Small Batch Distillers, Denver, CO

27. The American Distilling Institute

28. The Brewers of Indiana Guild

29. Sweetgrass Farm Winery & Distillery, Union, ME

30. Downslope Distilling Inc., Littleton, CO

31. North Shore Distillery LLC, Lake Bluff, IL

32. Finger Lakes Distilling LLC, Burdett, NY

33. St. George Spirits Inc., Alameda, CA

(34. Philadelphia Distilling, Philadenlphia, PA)

(35. Distillery 209, San Francisco, CA)

(36. Peak Spirits, Hotchkiss, CO)

(37. Maine Distilleries, Freeport, ME)

(38. Clear Creek Distillery, Portland, OR)

39. Ryan & Wood Inc, Gloucester, MA

40. Artisan Spirits, Portland, OR

41. Bendistillery, Bend, OR

42. Brandy Peak Distillery, Brookings, Oregon

43. Dolmen Distillery, McMinnville, Oregon

44. Highball Distillery, Portland, OR

45. House Spirits, Portland, Oregon

46. Indio Spirits, Tigard, Oregon

47. Integrity Spirits, Portland, Oregon

48. Northwest Distillery Inc, Warren, OR

49. McMenamins Edgefield Distillery, Troutdale, OR

50. New Deal Distillery, Portland, OR

51. Ransom Distillery, McMinnville, OR

52. Rogue Spirits, Portland, Oregon

53. Sub Rosa Spirits, Portland, Oregon

54. Integrity Spirits, Portland, OR

55. Wolf Bros Distillers, Rochester, NY

Producers In Licensing Process

1. Sherman in KY

2. Paul in CA

3. Penobscot Bay Distillery, Winterport, ME

4. Las Vegas Distillery LLC, Las Vegas, NV

5. River Town Distillers LLC, Snohomish, WA

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Just remember that DISCUS is a membership organization. Bill Owens has good relationships with people at several of the DISCUS member companies, such as Beam Global and Brown-Forman. If the majors can be persuaded that micro producers are not a threat and are, in fact, a boon because they bring new excitement to the spirits category, they may be willing to keep their lobbyist at bay.

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Just remember that DISCUS is a membership organization. Bill Owens has good relationships with people at several of the DISCUS member companies, such as Beam Global and Brown-Forman. If the majors can be persuaded that micro producers are not a threat and are, in fact, a boon because they bring new excitement to the spirits category, they may be willing to keep their lobbyist at bay.

This is most excellent work folks. way to unite for the common good!!!!

Please add to the list.

Essential Spirits Alambic Distilleries, Mountain View, CA

In addition, i have also cross posted this thread, plus the request and the list of suppoters over at the Ministry of Rum ( http://ministryofrum.com/forums/showthread...17078#post17078 )

There may be some distillers on that site that have not yet seen this.

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Just made it to 62 producers who've signed on through this board or I've spoken with by phone (in parentheses).

Current Producers

1. Modern Spirits LLC 168 W Pomona Ave, Monrovia, CA

2. Colorado Gold LLC, Cedaredge, CO

3. Tuthilltown Spirits, Gardiner, NY

4. Dry Fly Distilling, Spokane, WA

5. Ellensburg Distillery LLC Ellensburg, WA

6. Dynamic Alambic Artisan Distillers LLC Mattawa, WA

7. Great Lakes Distillery LLC, Milwaukee, WI

8. Drum Circle Distilling, Sarasota, FL

9. Grand Traverse Distillery, Traverse City, MI

10. Mystic Mountain Distillery, Larkspur, CO

11. Pacific Distillery LLC, Woodinville, WA

12. Delaware Phoenix Distillery, Walton, NY

13. Heartland Distillers, Fishers, IN

14. Fat Dog Spirits, Tampa, FL

15. Harvest Spirits LLC, Valatie, NY

16. Cascade Peak Spirits, Ashland, OR

17. New Holland Brewing Co. and Artisan Spirits, Holland, MI

18. Newport Distilling Company, Newport, RI

19. 45th Parallel Spirits LLC. New Richmond, WI

20. Gnostalgic Spirits, Ltd., Portland, OR

21. Blackwater Distilling Inc., Annapolis, MD

22. Cold Smoke Distillery Inc., Bozeman, MT

23. The Solas Distillery, Omaha, NE

24. Parched Group LLC, Richmond, VA

25. AEppelTreow Winery, Burlington, WI

26. Leopold Bros. Small Batch Distillers, Denver, CO

27. The American Distilling Institute

28. The Brewers of Indiana Guild

29. Sweetgrass Farm Winery & Distillery, Union, ME

30. Downslope Distilling Inc., Littleton, CO

31. North Shore Distillery LLC, Lake Bluff, IL

32. Finger Lakes Distilling LLC, Burdett, NY

33. St. George Spirits Inc., Alameda, CA

(34. Philadelphia Distilling, Philadenlphia, PA)

(35. Distillery 209, San Francisco, CA)

(36. Peak Spirits, Hotchkiss, CO)

(37. Maine Distilleries, Freeport, ME)

(38. Clear Creek Distillery, Portland, OR)

39. Ryan & Wood Inc, Gloucester, MA

40. Artisan Spirits, Portland, OR

41. Bendistillery, Bend, OR

42. Brandy Peak Distillery, Brookings, Oregon

43. Dolmen Distillery, McMinnville, Oregon

44. Highball Distillery, Portland, OR

45. House Spirits, Portland, Oregon

46. Indio Spirits, Tigard, Oregon

47. Integrity Spirits, Portland, Oregon

48. Northwest Distillery Inc, Warren, OR

49. McMenamins Edgefield Distillery, Troutdale, OR

50. New Deal Distillery, Portland, OR

51. Ransom Distillery, McMinnville, OR

52. Rogue Spirits, Portland, Oregon

53. Sub Rosa Spirits, Portland, Oregon

54. Integrity Spirits, Portland, OR

55. Wolf Bros Distillers, Rochester, NY

(56. Titos Handmade Vodka, Austin, TX)

57. Essential Spirits Alambic Distilleries, Mountain View, CA

Producers In Licensing Process

1. Sherman in KY

2. Paul in CA

3. Penobscot Bay Distillery, Winterport, ME

4. Las Vegas Distillery LLC, Las Vegas, NV

5. River Town Distillers LLC, Snohomish, WA

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I'm posting the note below on behalf of Tito's...it's from a Sept. 10 email conversation I had with Bert.

"I think you should use the beer law and change barrels to cases and beer to spirits. It would then be the first 60,000 cases for companies who make less than 2,000,000 cases. I could get behind that.

Also, the whole reason to do this would be for jobs in America. Inbev has bought budweiser. Diagio and Pernot Ricard are British and French and they are the largest spirit producers in the world. We are losing jobs and there is no greater way to add value to American agricultural products than to turn them into distilled spirits.

Please feel free to post my comments in the forum."

Bert "Tito" Beverage

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  • 2 weeks later...

Dear fellow spirits makers,

I have some very exciting news to share with you. Our efforts to create a lower federal excise tier are drawing some high-level attention from lobbyists, big craft spirits producers (Titos, Hangar One and Anchor), small beer makers and now DISCUS.

The upshot of conversations I've had over the last few weeks with principals or representatives of all of the above is that we'll have a difficult time passing our proposed legislation on our own. While much of this could turn out to be little more than betting on the status quo (generally good odds) or not so subtle attempts to "manage" our efforts, I think that there's a grain of truth to the notion that we'll need some help to get meaningful legislation passed next year.

Which leads me to a meeting that will take place this Thurs. at Anchor Steam between the heads of a handful of influential small spirits producers (Anchor, Hangar One, Charbay), the head of DISCUS, me and possibly a very high level member of the House of Representatives. This meeting could accelerate our efforts and give it political muscle...for a price which may be worth paying.

The topic of our meeting is how we and DISCUS can work together to achieve our respective goals.

As many of you may already know, there's movement afoot in Congress to raise federal excise taxes across all categories of liquor (beer, wine and spirits) and tobacco by some $5 bil. Depending on how the horsetrading ends, it could mean as much as a 20% hike in federal excise taxes for spirits -- from $13.50 to $16.20 per proof gallon or another $0.54 per bottle at FOB. That could add $1+ to retail cost without any additional raw material cost increases we may want to pass on next year. Not a pretty sight, especially as consumers increasingly look for bargains -- something few of us make!

DISCUS is working all angles to build support against this tax hike. Given the shape of the federal budget come 2009, this may be tough to achieve. But they'd like our support in their effort. In return, I'll push for their help to create a lower federal tax tier for small spirits producers.

I think meeting and trying to work out an understanding that would protect our mutual and individual interests is worthwhile for the following reasons:

- We'll find out how much support or opposition we can count on from DISCUS

- We'll find out if we have any substantive issues in common (guessing there are lots -- e.g., easing of Sunday purchase laws, off-site tastings, direct sales to trade and possibly consumers, tasting rooms, etc)

- Then, once we've established common interests, we'll find out what types of deals are possible

- Finally, DISCUS could help us tell our story to members of Congress quickly, which could mean getting a bill passed next year

Regardless of the outcome of this meeting, we'll need to march forward with our grassroots efforts to pass our proposed legislation. This is important on every level I can think of!

Over the next week, I'll pull together the various threads of our proposal and run a new financial analysis, put it into a pdf document and share it on the board for each of us to send to our federal reps. Should have this up soon.

In the mean time, feel free to email or call me with input for Thurs. meeting.

Cheers,

Melkon Khosrovian

co-founder + spiritsmaker

Modern Spirits LLC

melkon@modernspiritsgroup.com

213.949.3569 m

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Cascade Peak Spirits supports this legislation. We will look this newest version over carefully but so far we totally agree with Melkon's proposal. It is about time and about fairness. I believe that the TTB will support this at some point in the near future. Oregon's Distiller's Guild should come out and voice their support. We will take care of that here soon.

Thanks, Melkon!

Diane, David, Mary, Demian: The Organic Nation crew!

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  • 4 weeks later...

BI Model.

There is a model for the DISCUS - Artisan Distillers relationship.

Fritz know about it. The craft brewers have 1 seat, 5 ex-official seats on the Beer institute board. We pay next to nothing for dues. Had this relationship for 10 plus years. Works well – if want further info.

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Regarding the notion of reshaping the Micro tax proposal so that the reduced rate applies to "the first 60,000 cases", rather than applying the maximum number proposed (60,000 production limit) defeats the entire purpose of establishing a tax consideration for the small producers. The producers putting out 2million cases a year do not need our discounted rate, they're raking it in. I'm sorry to say this seems like the bigger producers attempting to cash in on the micro proliferation. It is not a solution, but instead is merely giving big alcohol producers a break for something they are not. I am opposed to the application of the discounted rate in the proposal to include major producers who PRODUCE more than 60,000 gallons a year. Our proposal is generated and intended to HELP the small producer grow and prosper. It is not simply a discount for everyone to glom onto.

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Regarding the notion of reshaping the Micro tax proposal so that the reduced rate applies to "the first 60,000 cases", rather than applying the maximum number proposed (60,000 production limit) ....

If I may, I think that we should be talking proof gallons of production. All the TTB calculations are in proof gallons, not cases, bottles or liters. The last thing I want is more calculations to determine something that could be avoided in the early stages.

Perhaps others think in terms of cases, but a case of 375's is different than a case of 1.5's. While it is very important to me to know my product mix on a business level, on a tax level I really want to keep the paper work down!

Perhaps I am mis-reading this. But, at 60,000 proof gallons of production, we do not need to classify if the product is at 30% ABV or 60% ABV as proof gallons will reduce this. We do not need to classify 60,000 cases of 50 ML's verses 60,000 of 750 ML's.

Just my two cents - take it or leave it.

Fred Linneman

Mystic Mountain Distillery

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Fred is absolutely right. I referred to cases in my previous, it was in error. I meant proof gallons. Now if we could just get the State of NY to adopt proof gallons as the measurement device. In NY the State requires reporting in "wine gallons" even for spirits.

But to be clear, any limits we agree to should be "proof gallons". Thanks Fred.

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I'm opposed to the wording of "the first 60,000 cases" as well, for all the same reasons.

Regarding the notion of reshaping the Micro tax proposal so that the reduced rate applies to "the first 60,000 cases", rather than applying the maximum number proposed (60,000 production limit) defeats the entire purpose of establishing a tax consideration for the small producers. The producers putting out 2million cases a year do not need our discounted rate, they're raking it in. I'm sorry to say this seems like the bigger producers attempting to cash in on the micro proliferation. It is not a solution, but instead is merely giving big alcohol producers a break for something they are not. I am opposed to the application of the discounted rate in the proposal to include major producers who PRODUCE more than 60,000 gallons a year. Our proposal is generated and intended to HELP the small producer grow and prosper. It is not simply a discount for everyone to glom onto.
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The Small Producers tax credit on the wine side is structured as the 'first 100,000 wine gallons'. Then it's phased out between _total_ product between 100,000 and 250,000. I believe that's so that wineries growing into that size range aren't completely rocked by a sudden change in taxation. It gives a sliding scale for that middle range, rather than a sudden jump - and there's some merit to that.

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The sliding scale for growing distilleries works for me.

The Small Producers tax credit on the wine side is structured as the 'first 100,000 wine gallons'. Then it's phased out between _total_ product between 100,000 and 250,000. I believe that's so that wineries growing into that size range aren't completely rocked by a sudden change in taxation. It gives a sliding scale for that middle range, rather than a sudden jump - and there's some merit to that.
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  • 2 weeks later...

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