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An Open Letter to the United States Congress: Reduce the Tax Burden on America’s Craft Brewers!
June 6, 2011
Dear Member of Congress:
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I urge you to support the Brewer’s Employment and Excise Relief (BEER) Act. Introduced as S. 534 by Sen. Kerry (D-MA) and Sen. Crapo (R-ID) and as H.R. 1236 by Rep. Gerlach (R-PA) and Rep. Neal (D-MA), this bill would lower the excise tax on small brewers in order to create jobs and economic growth.
Despite the unintelligible system of overlapping taxes, fees, and regulations imposed at the local, state, and federal levels, the brewing industry has seen astonishing growth over the past 40 years. In 1970 there were fewer than 100 breweries in the United States. Today, there are more than 1,700 small breweries, employing nearly 100,000 workers. While the industry has rapidly evolved, federal tax laws have not developed with it. Currently, small brewers, defined as those that produce fewer than 2 million barrels per year, pay a federal excise tax of $7 per barrel on the first 60,000 barrels produced. Once that low threshold is reached, all brewers, regardless of size, pay an onerous $18 tax per barrel. These provisions serve as disincentives for small brewers to invest for future expansion.
The BEER Act establishes a new excise schedule for small brewers that would reduce the tax rate on the first 60,000 barrels a firm produces to $3.50 and institute a $16 levy on subsequent amounts, up to 2 million barrels. Furthermore, the legislation broadens eligibility for these reduced rates by revising the antiquated definition of small brewer. The bill would raise the production ceiling for the small brewer classification from 2 million barrels in annual output to 6 million barrels. Although NTU would prefer doing away with this distinction entirely, and remains committed to providing a fair tax shake for all participants in the alcoholic beverage industry, the legislation represents a positive step toward easing the harsh regulatory and tax regimes imposed on American brewers.
These small changes could have a considerable impact on economy growth. Despite accounting for just 5 percent of the total beer sold nationwide, craft brewers represent 50 percent of the brewery jobs and deliver an outsized down-the-line benefit for agricultural, manufacturing, hospitality, and other crucial industries. According to a study conducted by John Friedman of Harvard University, passing the BEER Act could increase economic activity by $115.6 million and generate more than 2,700 new jobs in just its first year.
With the economy sputtering, the BEER Act would be a valuable demonstration of Congress’ willingness to lighten government’s often-stifling grip on the business development necessary for a lasting recovery. For that reason, NTU encourages you to support the Brewer’s Employment and Excise Relief Act and any roll call votes will be significantly weighted in our annual Rating of Congress.
Sincerely,Brandon Greife Federal Government Affairs Manager
108 North Alfred Street Ø Alexandria, Virginia 22314 Ø Phone: (703) 683-5700 Ø Fax: (703) 683-5722 Ø Web: www.ntu.org