It's about the beer
Gina Miller and Bill Keeper
Hey Bill, did you know there’s a tax fight brewing between large beer companies and their
smaller craft brethren on Capitol Hill? It seems that the big guys, companies like Ahneuser-
Busch and MillerCoors, have a lobbying group called The Beer Institute. They're using it to
“actively oppose” the Small Brewer Reinvestment and Expanding Workforce, or Small BREW
Act, which is up for passage. On the other side of the issue is The Brewers Association —
essentially the trade group for craft brewers. They are strongly lobbying for the bill, which
would reduce the federal excise tax on beer from small producers. It's the biggest battle in
beer today and most people are unaware of it.
I received a press release from The Beer Institute which clams they have dropped their former
neutral stance on the legislation to now fight against it because it "divides the industry".
According to Chris Thorne, the VP of the group, they are fighting against the legislation since
they oppose any tax increase on beer. However, they strongly believe that "all of the industry
should unite behind one bill: the Brewer’s Employment and Excise Relief (BEER) Act," That's a
totally different bill which is expected to be introduced later this year and would reduce excise
taxes on beer produced by brewers large and small. Get it Bill? The Small BREW Act only
cuts taxes for small craft guys, not the macro -crapo guys. What a shock they're against it and
have pushed their own tax cutting proposal.
I read the bill and if enacted, the Small BREW Act would cut the federal excise tax on beer from
$7 a barrel to $3.50, which is placed on a small brewer’s first 60,000 barrels produced per
year. After that initial 60,000 barrels, small brewers must pay $18 per barrel, which would be
lowered to $16 under the bill. Good deal for craft brewers; not good for the big guys.
To further anger the A-B crowd, the bill would expand the tax code definition for a small
brewer. Right now, brewers who produce up to 2 million barrels of beer per year are
considered small brewers. The legislation would raise the limit to 6 million barrels per year.
The Beer Institute said the bill amounts to a “giveaway” for a handful of profitable brewers.
Huh? They can't really believe that this bill will push craft beer sales over their swill, can they?
The Brewers Association, with roughly 1,750 members (mainly craft brewers), includes well-
known, large, national brands like Brooklyn Brewery and The Boston Beer Co. (Samuel
Adams). Boston Beer Co. brewed just under 3 million barrels last year so they would be easily
under the 6 million limit to receive the tax relief to the chagrin of A-B and associates.
Look, anything that can help craft beer grow I'm for. The macro producers have long used
their size to manipulate the market and force feed consumers the worst kind of beer. It's only
fair that the micro brewer get a helping hand to even the playing field a bit.
That's it from me, chug-a-lug, Bill.....see you next month.
Hey Gina, I agree that many craft brewers are wonderful examples of small, main-street American
businesses that create jobs. And not just paper pushing jobs, I mean manufacturing jobs right
here in the United States. They're putting Americans to work to make a product in the USA that
is by and large consumed here. Those are good things for sure.
However I am concerned that his inside feuding in the beer industry comes at a time when
lawmakers themselves are debating tax increases. There’s a risk that all this arguing is drawing
attention to the beer industry when Congress is looking for revenue-raisers. Frankly I'm afraid
Capitol Hill will ignore both groups and just hike the excise tax on beer. It doesn't take a
soothsayer to know many politicians never met a tax they didn't like. And that is not a good thing.
Right now I don't see a big appetite on Capitol Hill to give a tax break to the beer biz especially
since they likely see it as a wildly successful industry that already gets a tax break. Now don't
get me wrong Gina, I do oppose any increase in taxes on beer. Those taxes are regressive and
are paid primarily by working men and women. Higher taxes are often counterproductive. In the
past they have often retarded the creation of jobs and depressed industrial growth. Just check
all the closed breweries and failed start up micros and you'll see what I mean.
In your section you imply that if taxes are lowered the price of beer go down. i doubt it. In fact I
think craft beer prices will continue to increase. To be honest, I'm offended at some of the prices
now being charged. It's not uncommon to find many six packs priced over $10 and even some
four packs going for more than that. Sure we pay since there's no alternative if we want good
beer but that's not to say it's a fair price. Because of that I'm guessing that lowering taxes will
only increase profit margins and not impact the price you and I pay in any way.
I'm also a bit concerned about raising the barrel total from 2 to 6 million - that's a 200% increase.
To me, If you are making 6 million barrels a year, you are not a small brewer and you don't need
a special tax break. Of course I realize that number is nothing to the industry giants but to a
grassroots craft brewery it might as well be the same as MillerCoors.
Part of me believes that beer is beer is beer and it ought to not be taxed at all, but if it is taxed
then all of it should be taxed the same. However a larger part of me realizes that in the real world
something has to be done to promote and protect craft brewers until they can grow enough to be
out on their own. Like you, I'm for anything that can help craft beer grow but I'm not sure this will
actually do it.
Here's looking at you, kid! See you next month.