Skip to content

Taxing Times

One Virginia Brewer’s Experience During COVID-19

When we talk about taxes, we often focus on the policy details—rates and thresholds, elasticities, economic incidence, and effective burdens—but that doesn’t always say much about the real-world impact of taxes and the people who pay them.

To help bridge that gap, we want to tell you the story of Black Narrows Brewing Company, a family-owned craft brewery situated at the heart of Chincoteague, a small island-town on Virginia’s scenic Eastern Shore. Chincoteague is known for its windswept beaches, bustling waterways, oysters, agriculture, and wildlife refuges—and home to the famed Chincoteague pony, a breed of wild horse that roams the shores.

When Josh Chapman, Black Narrows founder, decided to open his first brewery, he knew it had to be in Chincoteague, a place he and his wife, Jenna, remembered fondly from family vacations as children. It is now where Josh calls home, as does his father-in-law, Bob Huntley, who owns the brewery with his wife, Wendy.

In our conversations with Josh and Bob, they described Chincoteague as an “incredibly, fiercely loyal and local place,” that “clings very closely to its culture and its history.” Over the last few years, Josh, Bob and the Black Narrows family have worked hard to honor that ethos, weaving themselves and their business into the fabric of the Chincoteague community—a rich tapestry of fishermen, farmers, conservationists, and, like Josh and Bob, entrepreneurs.

Like everywhere else, the COVID-19 pandemic hit Chincoteague hard at the beginning of 2020. The island economy depends on a strong tourist industry, which was turned upside down by lockdowns and travel restrictions.

Luckily, due to the entrepreneurial spirit of Josh and Bob, Black Narrows found ways to turn the current crisis into an opportunity to innovate. They quickly embraced carryout and delivery service, rebuilt their indoor and outdoor spaces to allow for better social distancing, and expanded their canning and distribution operation to reach more consumers.

After months of hard work and uncertainty, Black Narrows is back on track, but that doesn’t mean there are no obstacles left in its way. The economic aid offered by Congress to small businesses at the start of the COVID-19 crisis has mostly dried up, and the prospect of another round of relief remains uncertain with negotiations stalled.

Compounding these immediate challenges are more fundamental issues, not least of which is the tax code, which often acts as a barrier to entrepreneurship.

In our discussions with Josh and Bob, it became clear that taxes are more than a financial inconvenience for their business. Time spent complying with complex tax laws is time that could otherwise be spent brewing a new beer or bringing it to market. The money that goes towards state and federal taxes, or to the professional help needed to file them, is money that could otherwise be spent providing benefits to their employees or expanding the business.

As Josh put it, new entrepreneurs quickly realize that “every single nickel, the time spent filling out every form, matters for cash flow, for reinvesting in the business. There are things I would really like to do as far as increasing our labor force, providing more jobs, providing better benefits.”

What can legislators do to reduce these barriers? What do small business owners need most as they struggle to recover from the pandemic-induced economic crisis? We’ve outlined a number of policy solutions to those questions in our research, below—short-term liquidity measures, tax code simplification, lower marginal tax rates, increased incentives to invest, and repealing discriminatory taxes—but we also asked Josh and Bob directly.

Listen to our full interview to learn more about Josh and Bob’s story and hear directly from entrepreneurs about the tax challenges they face and what policymakers  can do to address them—both in the context of COVID-19 recovery and long-term reforms to the tax code.