Small Brewer Tax

The small brewer tax rate was established in 1976 and has never been updated. Since then the annual production of America's largest brewery increased from about 45 million to 107 million barrels (300 million globally). The ceiling defining small breweries is 2 million barrels.

H.R. 4278, a bill introduced in December 2009 by Democrat Representative Richie Neal (MA) and Republican Representative Kevin Brady (TX) would redefine the ceiling defining a small brewery and reduce the beer excise tax for small brewers from $7 to $3.50 on the first 60,000 barrels of beer production. It would also reduce the tax on beer production between 60,001 and 2 million barrels by $2, from $18 to $16. All brewers large or small would pay the full current rate of $18 on any beer produced over 2 million barrels in any given year.

Reducing the beer excise tax rates paid by smaller brewers is the top legislative priority for Brewers Association members.

* This bill would help create jobs for America’s 1,500 + small breweries. Small breweries are small businesses who employ nearly 100,000 people in local communities throughout America.
o In 2009 over 950 brewpubs produced small annual volumes of between about 100 to 2,000 barrels, most under 800 barrels
o In 2009 over 460 microbreweries produced less than 15,000 barrels of beer.
o In 2009 about 85 regional brewers produced between 15,000 and 2 million barrels of beer
o America’s small brewers continue to face economic challenges, increased regulations, increased local and state taxes, and denied the benefit of the volume discounts on supplies which global brewers command.

A Harvard study of the Economic Impact of H.R. 4278 indicates that:

* The bill would generate more than 2,700 new jobs over the first year to eighteen months followed by an average of 375 new jobs per year over the following four years.
* Each new job would cost less than $4,000 in foregone government revenue in 2010.

In comparison, USA Today reported that recently passed job bills cost

* $52,000 per state education job
* $502,000 per highway construction job
* $30,000 per unemployment admin job

Craft beer from America’s small brewers has ignited a passion for beer that America has never experienced until now. It has also ignited the imagination of the world’s entrepreneurial brewers. An excise tax reduction on these American community small businesses would help assure beer drinkers of beer flavor and beer choice into the future.

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