Jack Daniel's Faces More Taxes From Cash-Strapped Hometown in Tennessee

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Jack Daniel's Distillery Fights Proposed Tax

Tennessee town going after whiskey

If ever there was a “company town,” it is Lynchburg, Tenn.

Jack Daniel’s and Lynchburg have been inseparable since a young man named Jack Daniel came there more than a century ago to learn the art of distilling corn mash into whiskey. He set up shop on the northeastern end of town and the company has never looked to go anywhere else. It produces 23 million gallons of amber gold – about a billion dollars worth, every year.

But the company’s deep pockets make it a prime target for a local government that is strapped for revenue – and now a private citizen wants to slap the storied whiskey producer with a $10 tax on each and every barrel the distillery fills.

“We are entitled to more money from the only industry in the county – Jack Daniel’s distillery,” said Charles Rogers, a 75-year-old retiree and self-described “concerned citizen” of Moore County – home to Lynchburg and Jack Daniel’s.

Rogers wants the proposed tax to pay the bills for new schools, roads, bridges, even a new water treatment plant.

Rogers says Moore County is “entitled” to more money because Jack Daniel’s used bucolic images of small-town life in Lynchburg to sell its product. And as Norman Rockwell made a living off of his iconic images of Americana, so too should Lynchburg, according to Rogers.

“They (Jack Daniel’s) created the image of this little old hamlet down here being the place where this fantastic whiskey is being made,” Rogers said. “And the people didn’t realize what was going on. They were being marketed all over the world as ‘the place.’”

In the same way a film company would pay ‘usage’ fees for a location, Rogers believes Jack Daniel’s should too. It’s a way, he says, of giving back to the community.

That idea infuriates Jack Daniel’s management. The distillery is Moore County’s largest employer. It accounts for a third of its tax base. And already, nearly 60 percent of the price of a bottle of Jack Daniel’s is in some form of tax. General Manager Tommy Beam says where does it stop?

“It’s a job killer because it ups our costs. We’re competing in a global marketplace,” Beam said.

The tax would add about 3.4 cents to the price of a bottle of JD. While that doesn’t seem like much on the surface, considering the distillery sells more than 100 million bottles of whiskey every year, it quickly adds up to about $4 million a year. That’s a million dollars more than the entire county budget. And a cost, says Beam, that could affect the company’s growth.

“We have been able to hire 25 or 30 people in the last four or five months. And if our costs go up $4 or $5 million dollars, that’s probably going to make us a little less competitive. So, we might not grow as much,” Beam said.

That argument rings hollow for Rogers. He figures the company could easily tack a nickel on to the price of a bottle, recover the tax and make a little money in the process.

And there’s another thing that really bugs Rogers. The Jack Daniel’s distillery attracts tourists. Lots of them. About a quarter of a million every year. More than 20,000 are expected this weekend alone for the Jack Daniel’s World Championship Invitational Barbecue Competition.

“We get 25, 30,000 people coming in here, we can’t even move around,” Rogers said. “There’s no place to park. Traffic is backed up sometimes a mile or two up the road.” He told the story of a pensioner who couldn’t find a place to park at the courthouse. She left her car in the middle of the road, saying ‘Maybe the sheriff can find a place to park it’.

The Moore County Council passed a measure this year asking the Tennessee Assembly for enabling legislation to put the question of a barrel tax on the ballot. Rogers is hoping to get it on in time for the presidential primary next March. But there’s a real divide among business owners. Some are for it, others are wary of biting the hand that feeds them. Those tourists bring lots of dollars with them.

Could the company possibly move to a more tax-friendly county? Most folks think not. But Lynchburg Mayor Sloan Stewart isn’t so sure.

“Everybody says no they won’t. You can’t say no they won’t. That’s always a possibility,” he said. “There’s a chance they could do something like that, pack up and move.”

Beam, the general manager of Jack Daniel’s, says a move certainly wouldn’t be his first choice. Jack Daniel’s likes it here – even revels in the idea of producing top-shelf whiskey in a county that’s been dry since prohibition.

But Beam thinks the idea of taxing someone just because they’re successful is fundamentally unfair.

“That’s not free enterprise and that’s not what this country was built on,” he said. “I saw a quote the other day that said that a person used to look at a successful person and say now, what do I have to do to become like that? Whereas now, they might look at him and say, what can I do to get what they’ve got.”