[Congressional Record Volume 161, Number 66 (Monday, May 4, 2015)]
[Senate]
[Pages S2600-S2602]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. McCONNELL (for himself and Mr. Paul):
S. 1179. A bill to exempt the aging process of distilled spirits from
the production period for purposes of capitalization of interest costs;
to the Committee on Finance.
Mr. McCONNELL. Mr. President, this past Saturday, May 2, saw the
running of the 141st Kentucky Derby, the most exciting 2 minutes in
sports. Derby day is a cause for celebration across the State and derby
celebrations often feature Kentucky's native spirit of bourbon. Bourbon
is a key ingredient in the legendary Mint Julep, the official drink of
the derby. Fittingly, today marks the 51st anniversary of the original
congressional bourbon resolution that designated bourbon as a
distinctive product of America.
Kentucky is the birthplace of bourbon. The drink is named for Bourbon
County, KY, where the product first emerged, and today Kentucky
produces 95 percent of the world's supply. The bourbon industry
generates 15,400 jobs with an annual payroll of $707 million statewide.
It is a $3 billion industry in Kentucky and a vital part of the State's
tourism and economy. Simply put, the bourbon industry is a signature
industry for the Commonwealth of Kentucky.
That is why the legislation I introduce today is so important. I rise
to introduce the Advancing Growth in the Economy through Distilled
Spirits Act, or the AGED Spirits Act. Cosponsored by my friend Senator
Rand Paul, it will correct a provision in the tax code to ensure that
Kentucky's bourbon producers are no longer at a disadvantage with their
global competitors.
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.
In the United Kingdom, however, 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.
My bill would fix this discrepancy by permitting American bourbon and
whiskey producers to deduct interest
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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. This legislation will not only put Kentucky's
bourbon industry on a level playing field with its global competitors,
it is also a pro-growth measure that will help provide a boost to our
economy and help create jobs in Kentucky.
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. Finally, this problem reveals just one of the many
flaws in our Nation's broken tax code, which ultimately needs to be
comprehensively reformed to promote even greater job creation and
economic growth in our country.
So I hope my colleagues will join me in advancing growth in
Kentucky's and America's economy by leveling the tax playing field for
America's distilled spirits. 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.
I urge my colleagues to support the AGED Spirits Act, and I look
forward to its swift passage.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 1179
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Advancing Growth in the
Economy through Distilled Spirits Act'' or the ``AGED Spirits
Act''.
SEC. 2. PRODUCTION PERIOD OF DISTILLED SPIRITS.
(a) In General.--Section 263A(f) of the Internal Revenue
Code of 1986 is amended--
(1) by redesignating paragraph (4) as paragraph (5), and
(2) by inserting after paragraph (3) the following new
paragraph:
``(4) Exemption for aging process of distilled spirits.--
For purposes of this subsection, the production period shall
not include the aging period for distilled spirits (as
described in section 5002(a)(8)).''.
(b) Effective Date.--The amendments made by this section
shall apply to the production of distilled spirits that
begins on or after the date of the enactment of this Act.
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By Mr. WYDEN (for himself and Mr. Hoeven):
S. 1186. A bill to amend the Internal Revenue Code of 1986 to provide
for Move America bonds and to allow such bonds to be converted into tax
credits to support public-private partnerships; to the Committee on
Finance.
Mr. WYDEN. Mr. President, modern transportation infrastructure is a
critical building block to ensure that the U.S. economy is in a
position for long term growth and prosperity. It creates jobs, draws
investment and supports overall global competitiveness. With the
deadline for the Highway Trust Fund reauthorization looming just a
month away, we are faced with the reality that our crumbling
transportation systems simply are not up to the job.
Our aging infrastructure impacts everyone. Every day, Americans leave
their homes to commute to work or school only to be faced with more
than just snarled traffic, but roads in dire need of repair. More than
one-fifth of U.S. roads are in poor condition, with nearly one-half
trillion dollars in needed repairs across the country over the next
decade.
U.S. ports, a critical economic doorway, are struggling under the
weight of increased cargo traffic, leading to congestion and slowing
exports. They now require nearly $30 billion in landside investment
alone to keep up with the general demands they are under. Our national
infrastructure is in a clear state of decline, demanding $3.6 trillion
in total investment by 2020, according to the American Society of Civil
Engineers.
For one of the largest economies in the world known for its strength
and leadership, we are falling behind other countries. Our
infrastructure spending has continued to decline since 1960. It is now
at less than two percent of GDP annually. That falls behind China's
nine percent and Europe's five. Meanwhile, our population continues to
grow, placing new demands on our aging transportation system.
How do we get back on track and safeguard the health of our
transportation infrastructure? The first step is for Congress to ensure
the solvency of the trust funds for highways, transit, airports, ports,
and waterways. Critical infrastructure projects demand long term
planning and certainty, not a continual cycle of start-stop efforts. We
must aim for a long-term, bipartisan solution so that every year states
don't have to put projects on hold for fear of running out of funds.
Second, its time Congress looked beyond Washington and bring the
private sector to the table to spur new financing partnerships that
support our infrastructure needs.
There is an untapped opportunity here: Standard and Poor's estimates
that private investors could provide more than $100 billion in
infrastructure investment each year. Public-private partnerships, P3s,
are unique in that they offer upfront capital financing, along with the
transfer of risk to the private partner, allowing for more efficient
project design, construction and maintenance. P3s have been successful
in the U.S., as well as other countries around the world.
Recognizing this pressing need and opportunity, today Senator Hoeven
and I are introducing the Move America program. Move America is
designed to strengthen our transportation system by making it easier
for the states to put together P3s and draw private investment. This
unique, bipartisan driven proposal complements federal funding efforts,
by creating cheaper and more effective financing tools to expand
investment in roads, bridges, transit, ports, rail, and airports.
Move America expands tax exempt private activity bonds and creates a
new infrastructure tax credit, giving stakeholders significant
flexibility to pursue infrastructure projects that are badly needed in
states and localities. And these tools are available for use regardless
of who owns the project--government or private groups--making
financing, management, and leasing arrangements much simpler. The bonds
also exempt the interest income from the alternative minimum tax,
making it an attractive proposal to investors.
For states that are hesitant to issue more debt, or that are looking
to leverage more private equity, Move America credits would be
available for the state to attract equity investors for infrastructure
projects. The credits are available to the extent there is at least
twice as much private investment in the project. This one-to-one match
leverages additional equity investment at a lower cost to states and
cities, lowering their capital costs or allowing them to reduce tolls
or other revenues required for the project.
Critical transportation projects come to life in less time and at
less cost to taxpayers. Americans can travel on safer footing. The
private sector finds a new investment opportunity.
Strengthening our country's transportation infrastructure shouldn't
be a political issue. It is time we come together and create a path to
move America forward and build the 21st century infrastructure that our
country deserves.
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