April 05,2005

Baucus Pushes to Simplify Tax Code for Small Businesses

Senator Says Repealing Special Occupational Tax Will Encourage Job Growth

(WASHINGTON, D.C.) U.S. Senator Max Baucus introduced legislation (S. 702) todayrepealing the Special Occupational Tax (SOT) affecting taxpayers who manufacture, distribute,and sell alcoholic beverages. Baucus joined with Senators Jim Bunning (R-Ky.), Tim Johnson(D-S.D.), Jim Talent (R-Mo.), and Larry Craig (R-Idaho) in introducing the measure.

Baucus has led the efforts for the last three years to repeal this antiquated tax, which wasoriginally intended to finance the Civil War. Baucus said the time has come to remove thisnuisance tax out of the Internal Revenue code.

“Businesses are being unfairly taxed by this outdated law,” Baucus said. “Many smallbusinesses across the country as well as my home state of Montana are being adversely affectedby this law that has outlived its original purpose. Wiping this tax from the books will simplifythe tax code and remove an unnecessary burden from small businesses.”

Over 3,000 businesses across the State of Montana are affected by the tax. After hearingof the introduction of the bill, Mark Staples, an attorney for the Montana Tavern Association,said this was “tremendous news.” Staples said, “We’re delighted that Max continues to push toget this antiquated and unjustified tax off the books and off the backs of Montana smallbusinesses.”

The tax collected by the Treasury Department’s Bureau of Alcohol and Tobacco, Tax andTrade Bureau (TTB), is unfair because business owners must pay the $250 fee for every retailestablishment they own, instead of a one-time fee for all locations.Over 200 years old, the SOT tax is imposed on those who manufacture, distribute, andsell alcoholic beverages. The SOT does not tax alcohol, but instead forces business owners topay a license fee. Taverns, bars, bowling alleys, casinos, grocery stores, restaurants, floristsincluding wine in gift packages, as well as seasonal businesses including golf courses and skiresorts are penalized by the tax.

“Small businesses are the engine of economic growth,” Baucus said. “Nickle and dimingthese businesses is not the right approach to create jobs. Congress should take the appropriatesteps to correct this antiquated law within the tax code. The SOT is bad for business andeconomic growth.”

The repeal of the SOT is supported by a broad-based group of business organizations andsupported by both parties on Capitol Hill. Most recently, the SOT was repealed for three yearsin the American Jobs Creation Act passed in October of 2004. The bill introduced today wouldmake the repeal permanent.

# # #