Throughout my time serving in the Missouri House of Representatives, I have been committed to rooting out government waste. I believe that, when government runs efficiently, it lightens the tax burden on our businesses and helps Missouri working families. Cutting unnecessary taxes and regulations is one way of accomplishing this, but another is closing tax loopholes that amount to little more than corporate welfare. On the national level, a prime example of this was detailed by Anthony Constantini in his recent Washington Times op-ed: the foreign liquor loophole.

Section 5010 of the federal tax code—what many are now calling the foreign liquor loophole—is a little-known carveout for hard liquor manufacturers that dates back to 1980. Section 5010 gives big excise tax breaks for distilleries that add wine or “flavoring” to their products. When I say wine, I’m not talking about pinot gris. Usually, the wines used by distillers for the purposes of Section 5010 are made from fermented orange juice byproducts.

Of course, this has created a strange, perverse incentive to add these ingredients to liquor products. Right away, this disadvantages distilleries that rely on traditional whiskey recipes rather than adding extra ingredients in order to get a tax credit. Worse still, the biggest beneficiaries of the foreign liquor loophole are—you guessed it—the big, multinational alcohol conglomerates.

Chances are that you have never heard of the foreign liquor loophole, and the companies profiting from it want to keep it that way. Right now, there aren’t any labeling requirements forcing brands to disclose this practice, meaning that you could buy a bottle containing fermented orange juice byproducts without even realizing it.

I’m all for giving targeted tax relief to businesses that grow our economy and make life better for average Americans, but this is something different. The foreign liquor loophole is most lucrative to beverage makers who operate on a massive scale. Most of these are headquartered overseas. In fact, many of these same companies that have fought for decades to keep the foreign liquor loophole in place are simultaneously lobbying against tariffs on their products.

There’s another way that this loophole unfairly favors foreign liquor makers. It has to do with how tax regulators verify compliance. In the United States, the Alcohol and Tobacco Tax and Trade Bureau can send agents to distilleries to confirm what percentage of a product’s alcohol comes from wine or flavoring additives rather than straight distilled spirits. But those agents have no jurisdiction overseas. This puts domestic producers at a disadvantage.

This year, the foreign liquor loophole is projected to cost American taxpayers close to $220 million. That lost tax revenue means a heavier burden on American citizens and businesses. Over time, this loophole is adding up; the total cost to the U.S. government is expected to reach at least $2.5 billion over the next decade.

Why are we paying billions of dollars to incentivize foreign liquor producers to add mysterious “flavoring” ingredients to their products? This program was last audited in the early 1990s, and it has only grown since then. It’s high time we take a closer look at Section 5010 and ask ourselves what we’re really paying for.

As inflation makes it harder for Americans to afford everyday life, we need to systematically cut out the corporate welfare littered throughout our tax code. I think ending the foreign liquor loophole is a great place to start. If off-shore liquor producers want to stuff their products full of flavoring ingredients, that’s one thing. But as an American taxpayer, I don’t want to have to keep paying for it.

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