State Spirit: Kentucky’s McConnell and Paul Offer Tax Breaks for Bourbon
Policy + Politics

State Spirit: Kentucky’s McConnell and Paul Offer Tax Breaks for Bourbon

There was a time when Congress sent revenuers, the government agents charged with collecting taxes on alcohol, after folks making whiskey in Kentucky. But those days have gone the way of the bootleg still, and now a couple of top lawmakers want to give distillers a tax break.

On Monday, the top Republican in the Senate and one of the GOP’s leading presidential candidates came together in support of something close to both of their hearts: Kentucky bourbon.

Senate Majority Leader Mitch McConnell and Sen. Rand Paul, both Kentucky Republicans,  have introduced a bill to change the way producers of bourbon, the corn-based  whiskey made almost exclusively in Kentucky, are taxed. In the longstanding congressional tradition of torturing the English language in order to produce acronym-friendly legislation, they called it the Advancing Growth in the Economy through Distilled (AGED) Spirits Act.

Related: Will a Jammed Field Ruin the GOP’s Chances in 2016?

“The [bill] will preserve Kentucky’s signature bourbon industry by boosting job creation and establishing a level playing field between bourbon and whiskey producers at home and their competitors abroad,” Senator Paul said.

The problem, both lawmakers insist, is that while overseas producers of Scotch whisky are allowed, under U.K. law, to deduct the interest expense associated with maintaining their inventory as those expenses are incurred, U.S. producers face different rules. In the U.S., though, makers of distilled spirits that require aging, such as bourbon and other whiskies, must capitalize their interest expenses until the liquor is sold. That can get expensive, as some high-end bourbons can be aged for more than 20 years.

Related: 11 Things You Should Know About Mitch McConnell

This won’t be the first time that Congress has seen the need to pass bourbon-related laws. McConnell and Paul introduced their bill on the 51st anniversary of a 1964 piece of legislation codifying bourbon as the United States’ only “native” spirit. Under the law, bourbon must be made with a minimum 51 percent corn, must be aged in charred new oak barrels at no more than 125 proof and be bottled at no less than 80 proof.

According to the Kentucky Bourbon Distillers’ Association, the taxable value of all the bourbon that was aging in Kentucky in 2014 was $1.8 billion.

Top Reads from The Fiscal Times: