Federal Politics

Published — April 1, 2011 Updated — May 19, 2014 at 12:19 pm ET

Cheers! Beer tax break brews bipartisanship

Introduction

Lawmakers who normally wouldn’t warm bar stools together are brewing up some bipartisanship to slash the federal excise tax on small beer producers.

The sudsy collaboration invited quips from two senators who rarely agree but are together behind this bill. “If beer can’t do it, nothing can!” enthused Democrat Chuck Schumer of New York. “Maybe if we drink more of it, we’d have a better level of bipartisanship,” added Republican Richard Burr of North Carolina.

Both senators enjoy generous political support from the beer, wine and liquor industries, according to data compiled by the Center for Responsive Politics. Schumer was No. 1 ($155,600) and Burr was No. 4 ($66,600) on a ranking of PAC and individual donations to Senate campaigns in 2009-2010.

While Republicans and Democrats are battling over budget deficits and spending cuts, a more convivial group is clinking glasses across the aisle to support the “Brewer’s Employment and Excise Relief Act,” or BEER. It would forfeit an estimated $67 million in excise tax revenues over five years, according to a study financed last year by the Brewers Association and published by a professor at Harvard University.

Sponsors of the legislation are publicly touting the Harvard study as justification for action, seizing on its projection that 4,200 new jobs over five years could be created nationwide as a direct result of increased economic activity sparked by tax relief for small brewers. The sponsors, when asked how the beer break squared with looming budget cuts, all cited job creation.

“Micro-brewing and small brewing is creating a lot of jobs,” Schumer told the Center for Public Integrity. “It’s also, because there are brew pubs at these breweries, revitalizing downtowns and bringing lots of young people back downtown.

“The excise tax is heavy, too heavy for a small business.”

Cutting excise tax helps bigger brewers too

The brewers are seeking the changes in Congress during a boom for microbreweries around the country. The craft-beer industry grew 11 percent by volume in 2010 while the overall beer industry was flat.

Lowering the excise tax, which has not changed since 1976, would also help a handful of well-known brewers whose success outstripped the tax code’s embrace of “small.”

The effort to top off tax advantages and to lift the barrel-limit definition from 2 million to 6 million per year for small brewers went nowhere in the last Congress. But continued congressional interest in job creation encouraged the brewers to try again. “With the Republican majority in the House, the climate is even more favorable,” said Bob Pease, Brewers Association chief operating officer.

Pease said his team squired brewery-owners representing some of the more than 1,700 small beer producers nationwide during a March 28 lobbying assault on staffs representing 42 members of Congress and five senators.

“When we tell them that small brewers represent just 5 percent of the market by volume, but contribute 50 percent of the jobs in the domestic beer industry, they say, `What? Can you tell me that again?’” Pease said.

A change in the tax code definition would lower brewers’ federal liabilities, and might produce ramifications that reach back into the states.
For instance, it could offset the possible effects of cash-strapped states that are trying to raise taxes on beer and brewers. Oregon, the second largest microbrewery producer in the country, flirted in 2009 with what might have become the first tax increase imposed on beer producers in 32 years. Illinois, Maryland, Pennsylvania and Michigan recently floated similar proposals, according to the Council of State Governments.

Expanding a federal definition for small breweries might also support states’ efforts to win advantages for craft brewers who are balking at restrictions on their flexibility to move their brands of beer among different distributors, said Eric Shepard, the executive editor of Beer Marketer’s Insights, an industry newsletter. One such measure pending in Massachusetts would also set the small-brewer threshold at 6 million barrels a year.

As with the federal effort, similar legislation in the Bay State is heartily supported by the Boston Beer Co., the largest American-owned brewery and the leading microbrewer in the country. Lifting the federal tax threshold for small brewers to 6 million barrels would benefit Samuel Adams’ creator, Boston Beer Co., which last year shipped 2.3 million barrels of beer, a 12 percent increase over 2009. The company has grown since its founding 26 years ago to employ 780 people.

Strong support in U.S. Senate

By the end of March, 25 senators from both parties – including eight members of the Senate Finance Committee – were on tap for BEER, introduced by Massachusetts Democrat John Kerry along with Mormon teetotaler Mike Crapo, an Idaho Republican. The malt barley industry is the fastest growing agricultural sector in Idaho, thanks to multinational large brewers, such as MillerCoors and Anheuser-Busch InBev, which are buying barley from farmers and building production facilities.

The CEO and founder of the Boston Beer Co., Jim Koch, made contributions totaling $4,800 to Kerry’s campaign war chest in December, according to the Federal Election Commission.

Among the senators supporting the beer legislation to date, the industry favorites in the last cycle, in addition to Schumer and Burr, were Ron Wyden, D-Ore., $77,122; Patrick Leahy, D-Vt., $54,000; Patty Murray, D-Wash., $50,774; David Vitter, R-La., $48,900; and Idaho’s Crapo, $38,333, according to the Center for Responsive Politics.

In the House, there are nine sponsors of HR 1236: Richard Neal, D-Mass., who got $54,528 from beer, wine and liquor interests in 2009-2010; Charles Boustany Jr., R-La., $15,000; Peter DeFazio, D-Ore., $12,662; Jim Gerlach, R-Pa., $12,000; Earl Blumenauer, D-Ore., $10,865; Duncan Hunter, R-Calif., $10,500; Lynn Jenkins, R-Kan., $9,650; Erik Paulsen, R-Minn., $8,000; and Ron Paul, R-Texas, $1,000.

The brewers do not expect to see the tax changes move as stand-alone legislation, Pease said, but hope the bill’s supporters could attach the provisions to another must-pass bill.

But Burr, who said he backs the excise tax bill on states’ rights grounds, was not optimistic.

“It’s very unlikely that anything like that will come out of the United States Senate,” he said. “It’s just not in the cards, because we’re going to be all-consumed with spending, deficit reduction and debt. That’s going to be the 800-pound gorilla.”

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Mark Sullivan
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Mark Sullivan

Trump needs to conduct these activities because the entire MSM media, excluding Fox, is campaigning against him 24/7/365.

Didn’t Monica’s boyfriend’s wife and various criminal enterprises outspend Trump by almost 2-1?

CapitalistRoader
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CapitalistRoader

Why wouldn’t he get an early start on fund raising? Hillary outspent him two-to-one in 2016. The Dem’s are the party of big money. The President knows this and is attempting to get a jump on it. Of course the Dem candidate will outspend him in 2020 so it’s only rational that he starts fund raising now.

George Young
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George Young

Oh brother. We just 8 years of the Campaigner – in – Chief. Where was this journalistic rectal thermometer then. Just another article about 2000 words too long that merely takes another slap at Trump for something he far from initiated.

j stevenson
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j stevenson

The big difference between Trump and all the rest is his refusing to accept funds from lobbyists, so they don’t have the White House access they are used to. These are the donors who buy the presidency and are as pixxed off that he won the election as are the media and the Dems. Lobbyists have never been shut out of the WH and Trump has told them he is not for sale.

Anonymous
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Anonymous

Trump needs to be impeached and tossed in prison. Then have the key thrown away so he will never be free. Then he can see how it feels not to have freedom.

Mark Sullivan
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Mark Sullivan

Thank you for the usual insightful leftist low IQ Snowflake response.

barney
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hes not imprisoning them hes sending them back to their country chill tf out

SOUTH JERSEY
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SOUTH JERSEY

WHY DONT YOU HAVE FREEDOM?

Tom Larkin
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Tom Larkin

First, something positive. I was happy to learn of empirical information in article. BUT, the article was so slanted against President Trump as to be deemed fake news (“Perhaps Trump just lied.” (Two different issues)). The article mentions that President Trump raised over $67 million, but ended 2018 with $19 million. President Trump spent over $40 million 2016 and 2017. President Trump conducted 57 political rallies. The article notes the hats and T-shirts sold, but NEVER MENTIONS THE INCREASE IN THE NUMBER OF REPUBLICAN SENATORS during a mid-term election that lost the House and the number of political rallies in… Read more »

Ted Sirois
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Ted Sirois

At least Trump is getting donations from willing donors. Fresh from his first election, Obama used billions of our children’s tax dollars to save thousands of union jobs in the car industry and bailed out the banks and many Wall Street businesses. This secured his source of reelection funds for his reelection four years later.

South Jersey
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South Jersey

TRUMP 2020; IS AN AMAZINGLY SMART MAN! VERY ORIGINAL & CREATIVE. I AM HAPPY TO HAVE HIS AS POTUS.

SOUTH JERSEY
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SOUTH JERSEY

THIS ARTICLE WAS OBVIOUSLY WRITTEN BY, A TRUMP-HATE-GROUP. THAT FEELS; IT IS NOT NORMAL TO BE SUCCESSFUL WITH YOUR OWN BRAND NAME. WHEN, IF FACT, IT IS NORMAL! >>>>> THIS IS >>> FAKE NEWS!!! <<<< ie: A PACK-OF-LIES; SPUN INTO; DEFAMATION OF CHARACTER. FOR A SINISTER-AGENDA OF; FASCIST DEMOCRATIC SOCIALIST, COUP D'ETAT