Overview: The Supreme Court has agreed to decide whether Congress may impose restrictions on home distilling under its taxing power in Department of Justice v. McNutt. While brewing beer for personal use remains permissible without federal tax, producing spirits faces stricter penalties and potential legal challenges regarding the necessary and proper clause.
The Full Story
Washington Examiner contributor Jay Rogers argues that while Congress may tax whiskey, the taxing power does not come with a key to the family garage. An 1868 law first barred stills from dwellings, and 26 U.S.C. § 5178 still bars a distilled spirits plant in any dwelling house or connected inclosure. The Justice Department states home stills are harder to inspect, so Congress may require production where officials can watch. Its petition says Congress acted 160 years ago in response to an extensive history of evasion.
In April, the 5th Circuit held the ban invalid, yet a divided 6th Circuit upheld it in a separate case. Both courts agreed the taxing clause alone could not support the ban, so the fight is over the necessary and proper clause. Enforcement is another matter. The 6th Circuit said the ban apparently has not been enforced in court for a long while, yet the government conspicuously declined to disavow enforcement of the ban. A rule the government won’t promise to leave alone stays a standing threat.
Brand & Industry History
Chief Justice John Marshall set the test in McCulloch v. Maryland. Congress’s means must be plainly adapted to a legitimate end, and he warned against laws passed under the pretext of executing its powers to reach objects not intrusted to the Government. The origin is mundane. In 1868, tax evasion by distillers was a genuine problem, and a ban cost less than a corps of inspectors.
What This Means
The author suggests the Supreme Court should hold that a law is necessary and proper under the taxing power only if it helps collect the tax, which leaves Congress free to require licensing and inspection. Congress should then adopt a personal-use rule for spirits modeled on the beer exemption, with an annual cap and no sales. The court will likely hear arguments early next year and decide by late June or early July.
Consumer Takeaway
For the drinker, making beer at home remains permissible without federal tax, allowing up to 100 gallons per adult annually, while a household with two or more adults may brew 200. In contrast, producing bourbon or scotch in a garage faces penalties up to $10,000 and five years in jail. The origin is mundane, but the enforcement remains a standing threat as the government conspicuously declined to disavow enforcement of the ban.
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