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Lawmakers push to make tax cut for breweries, wineries & distilleries permanent

Yahoo Finance's Jessica Smith joins Kristin Myers to discuss how breweries are pushing to make an expiring 2017 tax cut permanent.

Video Transcript

KRISTIN MYERS: All right, well, let's pivot now to, I'm going to call it a booze tax. You know, breweries, wineries, and distilleries are sounding the alarm about a tax hike that is only a couple of weeks away. Tell us what's happening there.

JESSICA SMITH: Yeah, this is a tax cut that was a part of the 2017 tax law that happened during President Trump's first year in office. It is specifically for wineries, breweries, and distilleries, and it's set to expire at the end of the year. The industry is now pushing Congress to make-- make the tax cuts permanent.

And to give you an idea of how much this could affect these businesses, if you look at the federal excise tax for beers, this is for small breweries, right now it's at $3.50 a barrel. It was, before the tax cuts, at $7 a barrel. So that's a really big difference. For larger breweries, it is $16 a barrel down from $18.

But if Congress doesn't do anything, on January 1 those taxes go back to those higher levels. I talked to the founder of Port City Brewing Company in Alexandria, Virginia, and he told me he used his tax cut savings to start offering retirement benefits to his full-time employees. If his taxes go up, he's going to have to start cutting back on those benefits. But he told me some smaller breweries might not be able to survive. Let's watch.

BILL BUTCHER: 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 a wide bipartisan support for making these tax cuts permanent. There's a bill that would do that, and it has 77 senators signed on to it. About half of the Senate actually signed a letter this week to Republican and Democratic leaders urging them to include that bill in a final government funding bill that they might consider next week. So we will see next week if they do come to a deal to fund the government and if this tax cut extension is a part of it. Kristin.

KRISTIN MYERS: All right, Yahoo Finance's Jessica Smith with those updates. Thank you so much.