An Open Letter to the United States Congress: Reduce the Tax Burden on America’s Craft Brewers!
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
Letter
