Owner of Sam Adams Beers: ‘I Will Likely Be the Last American Owner of This Company’

High corporate tax rate of 38% puts company at a disadvantage

Dogfish Head and Samuel Adams Collaborate on SAVOR Flowers
Dogfish Head and Samuel Adams Collaborate on SAVOR Flowers / AP

The founder of the Boston Beer Company says the high corporate tax rate imposed on U.S. businesses will likely cause him to be the last American owner of his company, according to testimony given before a Senate hearing.

"We are vulnerable because we currently report all of our income in the United States and pay a tax rate of about 38 percent on that income," said founder Jim Koch to the Senate Homeland Security and Governmental Affairs Subcommittee on Investigations last Thursday. "Because of our broken corporate tax system, I can honestly say that I will likely be the last American owner of the Boston Beer Company."

According to Koch, 90 percent of American beer production is made by foreign-owned companies. Koch says he is concerned because the current corporate tax structure makes it difficult for American companies like his to compete with foreign beer producers.

If the Boston Beer Company were under foreign ownership, its 38 percent corporate tax rate would be lowered to a range of 25 to 30 percent.

"That means that a dollar of pre-tax earnings is worth about sixty-two cents under American ownership but about seventy-two cents under foreign ownership," said Koch. "To put it another way, Boston Beer Company is worth 16 percent more to a foreign owner simply because of the current U.S. corporate tax structure."

"There are solutions," says Koch. "Cut the highest-in-the-world U.S. corporate tax rate to the mid-20s. And bring America’s international tax system in line with the rest of the industrialized world, by allowing U.S. companies to bring their overseas earnings home without additional taxes—just like the British and Canadians (among others) allow their businesses to do."

Sen. Rob Portman (R., Ohio) was critical of the high corporate tax rate in his opening statement at the hearing, calling for an overhaul of the tax code.

"Our tax code makes it hard to be an American company, and puts U.S. workers at a disadvantage," said Portman. "At a 39 percent combined state and federal rate, the United States has the highest corporate rate in the industrialized world."

"What’s happening is that the current tax system increasingly drives U.S. businesses into the hands of those best able to reduce their tax liabilities, not necessarily those best equipped to create jobs and increase wages here at home," continued Portman.

"That is, of course, bad for American workers and bad for our long-term competitiveness as a country," he said.