The politics of a pint: the push to extend craft beer tax cuts
WASHINGTON, D.C. - Believe it or not, there is actually something bringing members of Congress together in this divided time: beer.
There’s a bipartisan push to extend federal excise tax reductions to small breweries across the country under the Craft Beverage Modernization and Tax Reform Act passed under the 2017 Tax Cuts & Jobs Act.
U.S. Rep. Ron Kind (D-Wisc.) re-introduced the CBMTRA earlier this month. U.S. Rep. Mike Kelly (R-Pa.) and other top members of the Ways & Means Committee are co-sponsors, and are pushing to make the tax cut permanent as does companion legislation in the Senate.
The 2017 tax reform package slashed their federal excise tax in half, from $7 per barrel to $3.50 for the first 60,000 barrels for breweries producing 2 million barrels or less annually. Once a small brewery produces more than 60,000 barrels, they would be charged the same $16-per-barrel excise tax rate that a larger brewery pays.
“Every time the government says they are losing revenue, that means a hardworking American taxpayer got to keep more of her or his money,” Kelly said. “Shouldn’t the idea be (to) let’s do things policy-wise that actually promote growth?”
The Brewers Association, the beer industry’s top trade and advocacy group, says that has led to economic growth among many of the nation’s 7,100 craft breweries. President and chief executive officer Bob Pease surveyed member breweries following the initial reduction and found companies were using their newfound cash to upgrade their facilities, investing in new equipment and hiring more workers. On average, nearly three new employees per brewery.
“They’re increasing their employee benefits by raising pay, offering insurance or extending vacation time,” Pease said during a phone interview this week.
But the problem is that tax cut could be short-lived; it’s set to expire, or “sunset,” on Dec. 31, 2019. Industry leaders argue such a lapse could impact how a brewery operates. Many are small businesses, between 3 and 35 employees, according to the Brewers Association.
“One-thousand to 2,000 small businesses are going to see their federal excise tax rates double” if the tax reduction expires, Pease said. “Having that many small businesses incur that type of tax hit is going to be difficult to handle.”
The tax cuts currently apply to wineries, distilleries and cideries and would continue to apply under Kind’s proposal.
Right now, this new proposal has support from both Republicans and Democrats in both the House and Senate. Kelly, who is the co-chair of the House Small Brewers Caucus, believes this could very well pass this time around, as well. In the last Congress, the CBMTRA had 303 co-sponsors in the House and 56 in the Senate.
“They plow all of their time and all of their revenue into building their business,” Kelly said of brewery owners. “It has a great effect on our communities.”
There is a chance that the Act could receive just a two-year extension through 2021, Kelly said. But any extension would likely give both brewers and lawmakers a reason to raise their glass.