Senators McConnell and Paul Introduce Bourbon Bill on 51st Anniversary of Congressional Bourbon Resolution

May 4, 2015

AGED Spirits Act is a pro-growth measure that will help provide a boost to our economy and help create jobs in Kentucky

WASHINGTON, D.C. – On the 51st anniversary of Congress designating Bourbon as a distinctive product of America, U.S. Senate Majority Leader Mitch McConnell and Senator Rand Paul are introducing legislation which corrects a provision in the tax code to ensure that Kentucky’s Bourbon producers are no longer at a disadvantage with their global competitors.

Earlier today, Senators McConnell and Paul introduced “The Advancing Growth in the Economy through Distilled (AGED) Spirits Act,” which would level the playing field for Bourbon producers by allowing deduction of interest expense related to Bourbon inventories in the year it is paid, thereby improving their competitive position.

“Kentucky produces 95 percent of the world’s Bourbon supply,” Senator McConnell said. “Over 15,000 jobs in Kentucky are attributed to the Bourbon industry and it brings in billions of dollars to our state’s economy. This legislation will not only put Kentucky’s Bourbon industry on a level playing field with its competitors, but it is a pro-growth measure that will also help provide a boost to our economy and help create jobs in Kentucky.”

“The Advancing Growth and Exports through Distilled Spirits Act 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.

Under current law, unlike most other spirits, Bourbon and whiskey producers in America must capitalize the interest expense incurred to finance inventories, and it is not deductible until the product is sold, which could be as long as 23 years after a lengthy aging process. However, in the United Kingdom all spirit producers are permitted to deduct interest expense the year it is capitalized. This discrepancy is harmful to American makers of distilled spirits as it contributes to increased costs that directly create a competitive disadvantage for American products in the global marketplace.

“Our bill would fix this discrepancy by permitting American Bourbon and whiskey producers to deduct interest expense associated with production in the year it is paid by exempting the natural aging process in the determination of the production period for distilled spirits,” Senator McConnell said. “Making this change in law is a matter of common sense. The situation under current law, where American Bourbon and whiskey producers are not allowed to deduct the expenses related to storing and aging their product until it is bottled and sold, is akin to a homeowner not being able to deduct the interest on a home mortgage until the sale of the house.”

Over the last several years, high-end premium American Bourbons and whiskeys have enjoyed significant growth in volume both here in the U.S. and in international markets. Bourbon production has increased more than 150 percent since 1999. Given equitable tax treatment, American Bourbon and whiskey products, as well as related jobs, could grow even more. This problem reveals just one of the many flaws in the nation’s broken tax code, which ultimately needs to be comprehensively reformed to promote even greater job creation and economic growth in our country.

“Fifty-one years after its official recognition, Bourbon is responsibly enjoyed by adults all over the world, and not just on Derby Day. The industry has grown and thrived, and I am sure it will continue to do so. I want to thank and congratulate all the hard-working Kentuckians who have contributed to building our state’s vibrant Bourbon industry,” Senator McConnell said.

Eric Gregory, President, Kentucky Distillers’ Association, said, “Kentucky Bourbon can’t be made overnight like most spirits. It takes years of age and tender craftsmanship to produce the world’s finest Bourbon, but that’s actually a deterrent when it comes to the discriminatory tax policies that are restricting growth and investment. The AGED Spirits Act will relieve that burden, create new jobs and level the playing field for our signature industry as it competes in the global marketplace. We thank and applaud Senator McConnell’s leadership in this critical effort and look forward to working with him and our Kentucky Congressional delegation to protect our iconic spirit.”

Mark Brown, President and CEO of Buffalo Trace Distillery, added, “on behalf of the more than 1,300 employees at Sazerac’s three Kentucky distilleries – Buffalo Trace, Barton 1792 and Glenmore, I want to thank Senator McConnell for his filing of the AGED Spirits Act which will lift a burden that impacts manufacturers of Bourbon. Tearing down these discriminatory barriers will allow all Bourbon distillers to reinvest in their facilities and their employees.  Already, we are investing more than $100 million in updating our three distilleries in Kentucky, and have more than $100 million in development projects around the country. Passing of the AGED Spirits Act will allow these numbers to grow even further, in turn leading to additional job growth and the increase in production of Kentucky’s native spirit, which is in strong demand both here and abroad.  We commend Senator McConnell for his consistent support of the Bourbon industry and look forward to working with him to pass this important measure.”

Contacts:             Robert Steurer 202-224-8288, Stephanie Penn 202-224-8285 (McConnell)

Jillian Lane 202-224-4343 (Paul)


Enjoy Like a True Kentuckian: Responsibly