Congress may lower taxes on drinks

R Street's Kevin Kosar on federal drinks taxes:

The Beer Institute recently reported some happy news: 51 U.S. senators support a bill to lower federal drink taxes. The Craft Beverage Modernization and Tax Reform Act of 2015 (S. 1562) would:

  • Lower the federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers who make fewer than 2 million barrels per year;
  • Reduce the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and all beer importers;
  • Maintain the current $18-per-barrel rate for brewers who produce more than 6 million barrels;
  • Lower the tax on liquor for the first 100,000 gallons produced from $13.50 to $2.70 per gallon; and
  • Exempt home distillers from federal taxes.

The bill also would enact several other reforms, including reducing some tax-related reporting requirements and defining “cider” so that fizzier versions are not subject to pricey sparkling-wine taxes (cider is taxed at 22.6 cents per gallon and bubbly is taxed at $3.40 per gallon).

Whether the legislation will be passed and sent to President Barack Obama’s desk is anything but clear....