On Tuesday, the House Ways and Means Committee held a hearing on the importance of permanently extending the 2017 Tax Cuts and Jobs Act (TCJA)—a decision that carries immense consequences for America’s family-owned wine and spirits distributors.
The TCJA introduced key tax reforms, including the Section 199A deduction for qualified business income and updates to the estate tax. If the tax deduction isn’t extended, family-owned businesses could face a tax rate that is 16% higher than corporate competitors.
“The reason why this is so concerning is because when you think about who wholesalers are competing against, most of the time it’s against multinational corporations,” explains Michael Bilello, EVP, strategic communications & marketing, WSWA. “Wholesalers will be at a severe disadvantage when it comes to being able to make investments in their facilities, in their fleets and to keep truck drivers from going to other companies like Amazon.”
Section 199A’s impact on wholesalers
Nearly all of America’s wine and spirits wholesalers are multi-generational, family-owned, privately held businesses that are eligible for the Section 199A deduction.
“The importance of Section 199A to the livelihood of family-owned businesses across the country cannot be overstated. It has created jobs, supported local communities, and ensured American companies can thrive through the challenges presented by a global pandemic and the significant inflation of the last few years. Without it, many businesses would be forced to make difficult decisions about their workers, facilities, and business future,” wrote WSWA president and CEO Francis Creighton in a statement to the Committee.
The competition against large, publicly traded corporate distributors and retailers leaves the smaller businesses fighting for critical resources like employees, trucking, warehouse space and equipment. If these tax deductions expire, family-owned businesses would face a significant disadvantage.
“Without the 199A deduction, we simply would not have been able to compete with corporations that pay a lower tax rate. The playing field would have shifted, making it harder for businesses like ours to continue thriving and contributing to the local economy,” said WSWA chairwoman and president of Opici Family Distributing Dina Opici in a statement. “Since 2017, this deduction has allowed businesses like ours to invest in our employees, expand our fleets, upgrade our facilities, and give back to the communities we serve. It’s not just a financial benefit; it’s a lifeline that helps ensure the sustainability and growth of businesses that have been built from the ground up over generations.”

What’s next?
Bilello explains that now, after the hearing, the Committee will have a robust conversation about what the tax provisions are in addition to Section 199A, with estate taxes included.
“The estate tax is really important because the current exemptions help family-owned wine and spirits wholesalers remain healthy as operations move from one generation to the next,” he explains. “So what we are advocating for is a full and permanent repeal of the estate taxes to protect the businesses of our members and the future of family businesses.”
The estate tax currently accounts for half of 1% of federal revenue, according to Bilello. In this case, repealing the estate tax will spur job creation and growth in the economy. Additionally, it will also help owners pass on their businesses to other family members instead of being forced to sell.
In practice, reconciliation can take anywhere from a few weeks to a couple of months to complete, depending on these variables. For the specific concerns about 199A and estate tax provisions, WSWA will monitor updates from key committees like the House Ways and Means Committee and the Senate Finance Committee, as well as public statements from leadership about legislative priorities.