Current Policy

The issues that face the American winery.

At any moment there are dozens of bills in state and federal legislators that would affect your winery. While they vary in region and in scope, many fall under specific policy categories.

Read our policy positions and learn more about the major issues facing the American wine industry. These positions outline the history behind the issues, the significance of the possible changes and the stance WineAmerica has taken on the subject.

Policy Positions

Immigration

Issue

Many wine growing operations depend on the availability of foreign migrant workers, but the current visa program for agricultural workers does not adequately respond to the shortage in the labor supply.

Background

Under the current H-2A guest worker program, wine grape growers do not have the stable workforce necessary to make key business decisions: only 2% of wine grape growers and winery operators are able to use the program.

More than 2 million workers contribute time and labor as farm workers.  Nearly 70% are undocumented. No other workforce comes close to a comparable number of undocumented workers.  Still, the sector’s labor demand is not met.  Many operations have shut down or lost crops due to the shortage of a reliable workforce.

Farm Bill

Issue  

As an agriculturally-based industry, the passage and implementation of the 2014 Farm Bill is essential to the dynamic growth and development of the grape and wine industries.

Background

Below are some highlights of the recent Farm Bill:

  • Specialty Crop Research Initiative – To address critical needs by developing and disseminating science-based tools focus on specific crops and their regions. Research is to be conducted on important priorities such as plant breeding, pests and diseases, mechanization, genetics, food safety and pollination.
  • Plant Pest and Disease Program – Includes mandatory funding of $62.5 million in FY 2014-2017 and $75 million in FY2018. Also includes a minimum of $5 million dedicated to the National Clean Plant Network (NCPN).  The NCPN requires the Secretary of Agriculture to establish a network of clean plant centers in the US for diagnostic and pathogen elimination services to promote availability through nurseries of safe, virus-free plant materials to vineyards, orchards and other growers.
  • Specialty Crop Block Grants – The Specialty Crop Block Grant Program, administered by the Agricultural Marketing Service (AMS), is designed to enhance the markets for specialty crops like fruits, vegetables, tree nuts, dried fruits, horticulture, and nursery crops, including floriculture.  Applicants apply to their state departments of agriculture. The Secretary of Agriculture makes grants to state departments of agriculture allowing investment in programs and projects that support production-related research, commodity promotion, product quality enhancement, consumer health, food safety and other programs that enhance the competitiveness of specialty crop producers. It also includes a multi-state program established and administered by USDA. The programs will focus on food safety, plant pest and disease, research, and crop-specific projects addressing common issues.
  • Market Access Program (MAP) – Requires the Commodity Credit Corporation to carry out a program to encourage the development, maintenance, and expansion of commercial export markets through cost-share assistance to eligible trade organizations that implement a foreign market development program.
  • Value Added Producer Grants – Helps agricultural producers enter into value-added activities related to the processing and/or marketing of bio-based value-added products. Generating new products, creating and expanding marketing opportunities, and increasing producer income are the end goals of this program. Priority may be given to beginning farmers or ranchers, a socially-disadvantaged farmer or rancher, a small or medium-sized farm or ranch structured as a family farm, a farmer or rancher cooperative, or are proposing a mid-tier value chain, as defined in the Program Regulation. Grants are awarded on a competitive basis.
  • Disaster Assistance – Tree Assistance Program (TAP) provides financial assistance to qualifying orchardists and nursery tree growers to replant or rehabilitate eligible trees, bushes and vines damaged by natural disasters.

Taxes

Issue

There are a number of federal tax issues that could significantly impact the American wine industry including excise taxes, the small producer tax credit and estate taxes.

Estate Taxes

When the American Taxpayer Relief Act was signed into law in January of 2013, much of the pressure was eased for repeal of the estate tax. Had the law not been improved, the exemption would have reverted to $1 million with a top tax of 55%. The new law, which is permanent (unless amended again by Congress) raised the limit to $5 million indexed to 2012, meaning that for 2014, a person may leave or give away up to $5.34 million without owing any estate tax. In addition, spouses can combine their estate tax exemptions, thus the exemption could be combined by a couple to $10.6 for 2014. For larger estates, the tax rate is now 40%.

A summary of the law is available at: http://legislink.org/us/pl-112-240

Because of the impact on agriculture and other businesses, there continues to be interest in complete repeal of the estate tax.

Excise Taxes

The federal excise tax rates for wine are:

  • If less than 14% alcohol $1.07 per gallon
  • If more than 14% and not over 21% alcohol $1.57 per gallon
  • If more than 21% and not over 24% alcohol $3.15 per gallon
  • Artificially Carbonated $3.30 per gallon
  • Sparkling $3.40 per gallon
  • Hard Cider $.226 per gallon

Small Producers Tax Credit

The small producer tax credit was enacted in 1991. It allows wineries producing up to 250,000 gallons of wine per year a credit up to $.90 per gallon on part of their annual taxable removals, other than sparkling wine. Below are some highlights of the credit:

  • If production is 150,000 gallons or less, the credit is $.90 on the first 100,000 gallons (other than sparkling) taxably removed each year.
  • If production is more than 150,000 and not more than 250,000, the credit is reduced by 1% for every 1,000 gallons produced in excess of 150,000 (i.e., the more wine made, the smaller the credit). Contact the National Revenue Center for assistance in determining the correct rate of credit.
  • Wineries are not entitled to take credit during the year when there is no production.

 

Regulation

Alcohol Tobacco Tax and Trade Bureau (TTB)

Issue

Currently wineries are experiencing significant delays in getting labels and formulas approved by the Alcohol Tobacco Tax and Trade Bureau (TTB).

Background

TTB is the primary federal regulatory agency for wineries across the country and is responsible for enforcing the Federal Alcohol Administration Act.

As part of their regulatory role, the TTB reviews and approves over 100,000 labels and thousands of formulas submitted by wineries each year. Additionally, the TTB issues permits and advises other agencies on international trade issues,and collects excise taxes on all alcoholic beverages.

While the TTB is now the third biggest revenue generator in the entire federal government (taking in an estimated $23 billion in revenue), it has seen a 10% reduction in workforce since 2007. This has had a direct impact on the commodities that the TTB is required by law to regulate.