By John D. McKinnon
WASHINGTON--Almost 90% of the beer made in America now is made
by foreign-owned companies--and the U.S. tax code is one of the big
reasons, according to congressional testimony by the founder of the
Boston Beer Co., one of the largest remaining
American-headquartered beer makers.
Jim Koch, who says his company is significantly disadvantaged by
the high U.S. tax rate, told a Senate subcommittee that the tax
code has led to increased takeovers of American beer
makers--including many leading craft producers--by foreign
firms.
Lawmakers say the beer industry is a high-profile example of a
trend that has helped accelerate foreign takeovers of U.S.
companies in recent years.
Sen. Rob Portman (R., Ohio) said companies aren't to blame for
taking advantage of the opportunities created by the tax math. "If
there's villain in this story it's the U.S. tax code, and frankly
it's Washington," Mr. Portman, the subcommittee's chairman, said in
his opening statement.
Because of the differential between the higher U.S. corporate
rate and lower taxes offered by other countries, a dollar of pretax
earnings in the U.S. is worth 62 cents under American ownership,
but 72 cents under foreign ownership, he said. That has accelerated
the takeover of U.S. beer makers by foreign firms, he said.
Boston Beer is the maker of a line of beers named for Samuel
Adams, a Revolutionary Era figure. Mr. Koch says in his prepared
testimony that he is often approached about a takeover of his own
firm by foreign ownership.
But, he explained, "The simple answer [is], it's just not who we
are. Like Samuel Adams, our Patriot namesake, we were born in
America, have grown because of the advantages available in the
United States, and don't mind paying our taxes here in the United
States."
Still, he predicted that he would "likely be the last American
owner of the Boston Beer Company."
Write to John D. McKinnon at john.mckinnon@wsj.com