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Tax Cuts for Craft Beer

March 17, 2010 - by Donny Shaw

Did you know that the House of Representatives has a Small Brewers Caucus? Me either. But, then again, I also didn’t know about the “I‐73/74 Corridor Caucus” or the “Modeling and Simulation Caucus,” so my ignorance on the matter isn’t much of a surprise.

The Small Brewers Caucus is pushing a bill (H.R. 4278) from Rep. Richard Neal [D, MA-2] that would redefine “small” in the age of craft beers and create a new graduated excise tax rate for small breweries so that brewers who produce 100 barrels a year aren’t paying the same tax rate as, say, Yuengling. Washington Beer Blog explains:

The small brewer tax rate was established in 1976 and has never been updated. The world was a different place back then and the tax code defined a “small brewery” as one producing less than 2 million barrels per year. In short, a brewery making 190 barrels per year pays the same federal excise tax rate as a brewery producing 1.9 million barrels per year.

Most brewers in Washington produce less than 10,000 barrels per year. Even the most ubiquitous of local craft breweries (not counting Redhook) produces less than 50,000 barrels per year. Setting the “small brewery” ceiling at 2 million barrels hearkens back to a time when there was no craft beer industry in America and a brewery like Rainier was considered small.

The Small Brewer Caucus’ bill would lower the tax for the frost 60,000 barrels by 50 percent. Production between 60,000 and 2 million barrels would see a smaller tax cut, but combined, the two tax adjustments would save small brewers some $44 million per year. The “Brewers Association” is saying that the money will be used " to support significant long-term investments and create jobs by growing their businesses on a regional or national scale." But I wonder if they wouldn’t find more support if they just said they will make their most delicious and most over-priced libations cheaper.

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