Tennessee Considers Barrel Tax, Jack Daniel’s Objects

Brown-Forman has found itself lobbying the Tennessee State House again, but this time it isn’t defending it’s 2013 Whiskey Law. Instead, the company is defending itself from a measure similar in effect to Kentucky’s unpopular ad valorem tax on whiskey barrels.

According to the AP, a Moore County auditor determined that barrels of whiskey maturing in the county were taxable under the personal property tax. Brown-Forman, owner of Jack Daniel’s, has over two million barrels of whiskey in storage there, and paying that tax would add $2.8 million to the company’s annual bill.

Jack Daniel’s hasn’t paid taxes on its barrels since Prohibition was repealed nationally. Brown-Forman’s position has been and continues to be that the barrels are part of their inventory, not articles of equipment, since the barrels themselves are only used once and then sold on to other parties.

Much of the cost of a bottle of whiskey comes from the taxes at due to local, state and Federal agencies. Moore County, home of Jack Daniel’s, derives half of it’s operating budget from the taxes Jack Daniel’s already pays. It goes without saying that the distillery is the county’s largest employer.

Yet Moore County has a somewhat ambivalent relationship with its most famous industry. Despite hosting the biggest-selling whiskey brand in America, an oft-observed curiosity is that the county is dry, and has been teetotalling continuously since Tennessee passed statewide Prohibition in 1907.

Nor is this the first time Moore County has tried to tax Jack Daniel’s on a by-the-barrel basis for its whiskey. In 2011, many of the same personalities involved in the current attempt to make Brown-Forman pay more made an attempt to impose taxes on Jack Daniel’s inventory of aging whiskey. Back then, Moore County wanted a staggering $10 per barrel. However, when it crunch time came, the County council sided with their biggest industry and voted by a 10-5 margin against the proposed measure.