Thursday, October 20, 2011

Targeted Taxation

Surely this can't be legal?

For decades, Jack Daniel's whiskey has celebrated its small Tennessee hometown of Lynchburg with folksy, black-and-white advertisements urging folks to slow down and have a sip.

Now local officials want the maker of the world's top-selling whiskey to pay a bigger bar tab as they struggle with their budget. How does up to $5 million sound?

A measure approved by the Moore County Council asks the Tennessee legislature to authorize a local referendum on whether the distillery should pay that much in new taxes on the 500,000 barrels it fills with whiskey each year.

The 145-year-old distillery, tucked away on 1,700 hilly acres down the road from Lynchburg's quaint town square, now pays $1.5 million in local property taxes.

If the barrel tax is approved, it would be a huge help to the local government, whose annual budget is $3 million and would get every last drop, so to speak, of the money.

The people of this community have lost their minds. They should be ashamed of themselves. This company employs 450 people in a county with an unemployment rate of 10.6%.

"We're paying our part, our fair share," said Tom Beam, senior vice president and general manager of production at the facility. He said the distillery has already helped the area in several ways, including assisting with renovations at the courthouse and a swimming pool.

The senior vice president of Jack Daniels is Mr. Beam? Really? I wonder if the senior vice president of Jim Beam is Mr. Daniels...okay, enough silliness. There's another disturbing part of this story:

The Tennessean newspaper reports that the distillery's owner, Brown-Forman Corp., is ready to make political contributions as a possible fight looms: The company's political action committee has $278,000 heading into the 2012 elections.

Groan. The distillery has two choices; allow the local citizens to rob them of their profits through targeted selective taxation, or pay extortion money to state politicians.

Our system has rotted from greed and neglect. If the fine folks at the Jack Daniels distillery are smart, they'll lock the doors, board up the windows, and move their operation far from Lynchburg, Tennessee. Very far.

I'm sure the Canadians would welcome Old No. 7 with open arms.


  1. "I'm sure the Canadians would welcome Old No. 7 with open arms."

    You got that right lady red, Matt and I are not averse to a sip of JD every once in a while. And, I make a killer JD BBQ sauce yum yum.

  2. Everyone knows that companies always can pay more money. Sure, all they have to do is raise their prices a little bit. And the consumers of Jack Daniels will just say, "Sure, I'll pay a little more and not cut down a my Jack even a little bit."

    Politicians somehow think that nothing will change, and if they charge Jack Daniels $10 a barrel more in taxes, the company would still produce 500,00 barrels a year.

    The pols do not realize that that 500,000 may go to 400,000. Sure, that is $4,000,000 a year in taxes. But they need to remember that the company may then need only 350 employees instead of 450. And the other taxes that are currently collected will go down. Meanwhile, Jack Daniels may look to relocate somewhere else -- resulting in no employees needed and no tax revenue collected.

    As George McGovern once said after his business went bankrupt, "If I had been in business before being in the Senate, I would have voted a lot differently."

  3. This disgusts me so much that I can't even think of a coherent retort.

  4. "As George McGovern once said after his business went bankrupt, "If I had been in business before being in the Senate, I would have voted a lot differently." "

    And if that don't say it all I don't know what the fuck does.

  5. "Pass this bill! Pass this bill!"

  6. Wow, this is really insidious. This Charles Rogers guy is pretty clever.

    The $5M is easily affordable.

    [Matt, I agree qualitatively with your argument, and in plenty of cases it would be quantitatively material - but here, given the gross margins etc, I think they'd take a small hit on their dividend, deal with a tiny hit to their stock price, etc. The price would not be passed on. If I were an investor in Brown Forman I wouldn't consider the matter especially material. In fact... the stock looks pretty good, IMHO, tax or no tax...]

    So Rogers is clever for extorting an amount which is affordable. That's what smart extortionists do - they keep it at an amount that the victim will likely simply pay as a cost of doing business. First rule of parasites is don't kill the host and Rogers is a smart parasite.

    Rogers also figures that Moore County is the sin qua non of Jack Daniel's; that it would be impossible for them to relocate. This isn't entirely true of course, and in fact the Lynchburg verbiage is a part of their trademark: forget Canada, they could move to Shenzen and keep the same label. (See teh wik).

    Moore county is a rural county with at $3M annual budget? And that now goes to $8M? So, I guess, that Charles Rogers can effectively raise a private army of public employees like police and fire and rescue? Or what? How is this not needless extortion? I'm figuring if there were laid off cops or teachers or some such in the mix, ABC news would let me know about it. How is Moore County hurting? I mean it could be that they are, times are tough... but what the hell is the $5M going to go to?

    If I were a director of Brown-Forman I'd suggest that the company spend $2M lobbying and hiring $3M worth of security from Blackwater (I mean Xe). This would send a signal, a very important few bits of information to the idiots running the county. A stable Nash equilibrium would instantly emerge.

  7. I'm not surprised by this. Our fearless leader has been pushing class warfare stridently for a year now and it was bound to trickle down.

    It's a damn shame.

  8. "They owe something back to the county," said Rogers, a Lynchburg native and retired executive with the Chrysler Corp.

    Besides the $1,500,000.00 in property taxes each year? Who the hell is Rogers to decide they "owe the county" more?

  9. No matter what JD does, Rogers will always says they owe more. These people act like companies just sit there and steal money from the public an do nothing else but rake in the cash.

  10. FNC has picked up this story. Their reporter was interviewing Chrls Rogers who said one of the things driving his efforts to get this ridiculous additional tax against Jack Daniels on the ballot is that he's bothered by the inconveniences created by the tourist traffic the company draws every year.

    Well, if he gets his way, he won't have to worry about any future tourist traffic. JD will just move from a business-unfriendly county to one who would welcome the dollars they bring in with open arms.

    Good job, democrats. Keep that class warfare going.

  11. Mr. Beam pointed out that their industry is already one of the most heavily hit with between 50% to 60% of the cost of a bottle of liquor going to taxes.

  12. OT, I'm just listening to Rick Santorum talking about his economic policy. I like the guy but I can't understand for the life of me why he's staying in this race. He couldn't even retain his own state last election, sheesh.

    He and Huntsman should drop out now.