If you’ve been a regular consumer of wines that typically sell for about $15 a bottle or less, you’re probably happy with the way they taste.
But soon we’ll begin to see more alcohol in our so-called table wines, which will also be higher in calories, will taste sweeter (higher alcohols do that), will be slightly hotter, and won’t work with food quite as well.
This change is a result of the federal government unexpectedly, and unaccountably, issuing new regulations for wine that are not only anti-consumer, anti-moderation, and anti-food friendly, but appears to me to be a cynical way to give large wineries a huge tax benefit while dealing an economic haymaker to smaller wineries.
As we approach the 100th anniversary of the imposition of Prohibition, this regulation change that encourages higher-alcohol wines seems injudicious, not to mention unhealthful. One wonders what the medical community thinks of it.
This is a complex story. Ideally, a team of investigative reporters should scrutinize what actually took place to change regulations that have been in place for more than 80 years. But for various reasons, I’m sure no journalistic investigation will follow.
Here’s a quick look at what’s been afoot tax-wise for the last 18 months. The key change was embedded in the 2017 tax law:
SEC. 302. ADJUSTMENT OF ALCOHOL CONTENT LEVEL FOR APPLICATION OF EXCISE TAX RATES.
(a) In General. Paragraphs (1) and (2) of section 5041(b) of the Internal Revenue Code of 1986 are amended by striking “14 percent” each place it appears and inserting “16 percent.”
It’s that simple. But it has huge implications for wineries and consumers.
One positive impact of the law, it must be said, was to give warranted tax breaks to craft brewers and spirits producers. But it harms smaller wineries.
Since 1933, wineries paid a lower federal tax for wines less than 14%. This was an incentive to keep alcohols moderate. At 12%-13%, wines are better balanced and designed to go with food. And they cost less to make because of the lower federal tax.
In the days following the end of Prohibition, wines above 14% were classified as dessert wines because typically they had brandy added to increase their alcohol content; the additional tax was imposed to account for the addition of higher spirits.
But global climate change and other factors have altered many things, and it’s now easy to make wines with very high alcohols.
By saying that wines with as much as 16% alcohol are part of the “table wine” category, the government is making a mockery of the term. In fact, it is encouraging wineries to make wines with more alcohol than before.
This is an insidious issue that could lead to greater alcohol intake by consumers without anyone noticing. You would think that Mothers Against Drunk Driving (MADD) and other similar groups would be railing against this maneuver. So far, I have seen nothing from MADD or any other consumer group.
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So who are the greatest beneficiaries of the new regulation? Craft brewers and spirits producers, and wineries that produce more than 315,400 cases of wine per year, according to the law. There are only a handful of wineries in this class. Most wineries are small and family owned.
And although some smaller wineries do qualify for tax breaks under the new law, the way the benefits are structured, it would take a team of mathematicians to figure out how to apply for them.
One longtime federal tax compliance specialist who has been in the business for more than 40 years said that the formulas for claiming winery tax credits are so complex that even she cannot figure them out!
One wonders how such a regulation came about. Inside the wine industry, some cynics suggest this idea came unsolicited, over the transom, from an industry lobbyist who wanted to benefit giant wineries.
One admittedly cynical winery owner asked rhetorically why the government would willingly seek to make less tax revenue.
The difference in the federal tax seemingly isn’t great. Wines less than 14% are taxed at $1.07 per gallon and wines more than 14% are taxed at $1.57 per gallon.
But do the calculations and it’s evident that giant wineries could save many thousands of dollars a year under the new formula. But partly because of the complexity in applying for tax credits, smaller wineries will probably gain very little.
Award-winning author Jonathan Eig, who wrote of the Prohibition era in his book on Al Capone, spoke in 2010 of what he called “The law of unintended consequences.” It caused no end of ills for the country after the imposition of Prohibition, whose goals seemed lofty.
Instead, the country went through 14 years of crime.
Could we see unintended consequences occur with a flood of higher-alcohol “table wines” as a result of the imposition of this regulatory change?
The 2017 tax law is due to expire at the end of this year. It could be extended by Congress or passed as a new law, which industry sources suggest is likely.
I believe Congress should take a serious look at what might end up happening to “table wine” in a worst-case scenario.
Wine of the Week: 2018 Campuget Tradition Rosé, Costieres de Nimes ($13): Bright berry and floral notes and a faint trace of flowers are embedded in this light and delicate, decidedly dry pink wine from the south of France.
I have tasted about a dozen southern French rosés, and this one always seems to be as appealing as any of the others, and usually is found more reasonably priced than its competitors.
Of all the grape varieties that claim preeminence in this world, disheveled, tattooed, unshaven, sandal-wearing Pinot Noir seems to be the least likely candidate for stardom.