Irresponsible Liquor Companies Disregard American Communities
Foreign-owned liquor companies must have missed the memo about Americans struggling to pay for gas and groceries. Rising inflation is tightening family budgets — and gas prices across the country are at a record-high. In some communities inside my old district, gas prices are above the national average of $5. Still, the liquor industry continues to press lawmakers in Washington, D.C. and in states for additional tax carveouts that will ultimately pad their company profits at the expense of U.S. consumers and U.S. jobs.
The liquor industry already enjoys close to $1 billion every year in federal tax loopholes. Two obscure federal tax provisions, known inside the Beltway as “rum cover over” and 5010, provide significant financial benefit to big liquor, all funded by taxpayers. These companies are more than happy to charge high prices in the U.S. but then siphon off their profits, even as consumers fight through the pain of inflation. Where do these self-serving profits go? Investments in other countries like Mexico, France, Ireland, and others.
Big liquor is laughing all the way to the bank. Company executives gathered in New Orleans recently to toast massive gains in market value and sales volume. It’s not an industry in trouble. The billions in giveaways must stop. Now.
Federal lawmakers have previously introduced legislation targeting rum cover over, and we should continue to re-examine these issues to shed light on who really benefits from billions in tax loopholes: big liquor companies or American communities’ economies across the country. It’s easy to decide where the benefits should be going. Our communities are weighed down by the remnants of a devastating pandemic on top of inflation. Local businesses and workers are still climbing out from pandemic hits on their bottom lines and pocketbooks.
These local businesses are the key drivers of community economies, from jobs to wages. They are the ones who need our help. Any special tax considerations should benefit American-owned companies that support American jobs and workers.
You don’t have to look far in my home state of Pennsylvania to see local companies creating jobs, giving back to their local communities and helping those in need. Baby formula manufacturer ByHeart in Reading has been at the forefront of efforts to tackle a nationwide shortage. A roofing company in Oley is giving away a free roof to a deserving family for the ninth straight year. And recently, a logistics company joined together with the York County community to collect supplies for the people of Ukraine. These are the kinds of selfless actions throughout the Commonwealth and our nation that we should be supporting, while we also stand up for our local jobs and families.
In nearly every state where foreign-owned liquor pushed for special treatment during legislative sessions this year, lawmakers rejected the proposals. Hard liquor companies raked in record profits to a tune of more than $35 billion — yet the industry continues to aggressively lobby for more special carveouts. This no-holds-barred campaign to pad profits is a real threat for American communities. No amount of big liquor’s massive profits is reinvested back into local economies.
Pennsylvania families are paying record prices for essential items. Consumers in other states are struggling with the same high costs. During these difficult times, federal and state elected officials should continue to cast a wary eye at this nationwide lobbying campaign by Big Liquor which is seeking to protect massive tax windfalls and boost profits with no regard for real-life consequences. Instead, let’s fight to protect American jobs and American families.
Ryan Costello previously served as a U.S. Congressman (PA-06) from 2015-2019. Today, he is a government relations executive and strategic advisor who works to develop policy objectives and advocacy strategies on Capitol Hill.
