Young and Hungry

Does Congress Hate Small Breweries?

Another wrinkle in the beer tax saga over at the Senate Finance Committee: The proposed new tax structure would eliminate microbreweries' protections from excise taxes.

Currently, the standard excise tax is $18 per barrel (31 gallons). But breweries producing less than 2 million barrels a year — everyone except Anheuser Busch-InBev, MillerCoors, and Pabst — pays a reduced rate of $7 a barrel for their first 60,000 barrels each year. For the vast majority of craft brewers, this protection covers their entire output.

Congress saw it fit to protect small craft brewers in 1991 when this law was enacted. So why does the new proposal lack the nuance, the understanding of the product, of the current one?

Mike over at DC Beer echoes this sentiment neatly:

The bottom line is this tax unfarely (sic) targets a nascent and growing industry of entrepreneurs that have worked hard to carve out a niche where — for a long time — there has been monopoly of light lager beers.

But wait, it get's weirder: The Atlantic's Clay Risen reports on the Brewers Excise and Economic Relief Act (golly, that spells "BEER"!), introduced in Congress with the help of the Beer Institute and the Brewers Association. If passed, the bill would repeal the 1991 excise tax increases, lowering them to rates enacted back in 1951. And it would keep the microbrewers' tax breaks written into current law.

Hold on. I thought wholesome microbrews and their fizzy, yellow counterparts were enemies. So why are Big Beer and The Little Microbrewers That Could teaming up? Risen explains:

For now, at least, it seems the big brewers see the craft sector as an overall boon to the industry — too small to threaten the big guys' market share, but high-profile enough to elevate beer's status among higher-income consumers....[W]hen it comes to alcohol regulation and other policy issues, the beer world is realizing that Washington doesn't differentiate between Coors and Clipper City.

I also get the sense that the BEER Act is a noisemaker, more a statement to get beer companies' voices heard than a real attempt at legislation. And if it actually passes and the reduction is a boon to microbreweries, that helps the big guys too: More people buying craft beer also means more people unwittingly buying Michelob and Blue Moon.

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