You know that a small industry has finally arrived when it begins engaging in that classic tactic of American capitalism: lobbying, and in particular, seeking special tax breaks. The New York Times reported from the front lines of a campaign by small brewers around the country to woo over congressmen and Washington power brokers in support of a tax break that would save the craft brewing industry millions of dollars.
Turns out, it’s easier to build political support when you can pass out bottles of freshly brewed beer: the Brewer’s Association, the craft brew trade group, has managed to get 116 congressmen to join the House Small Brewers Caucus and even introduce a bill that would lower taxes on their product, the Small Brewer Reinvestment and Expanding Workforce Act.
What’s the problem?
“For every 31 gallons that we brew, $7 goes to Uncle Sam,” said Jeff Hancock, a co-founder of DC Brau, one of five craft breweries that have opened in the District of Columbia and its close suburbs in the last two years, joining dozens more in the rest of Virginia and Maryland.
Washington is just one of many places where craft brewing is booming.
“We are the victims of our own success,” said Patrick Conway, owner of the Great Lakes Brewing Company in Cleveland. Mr. Conway brought a delegation of 12 employees to Washington to network and publicize his brews with tap takeovers at local bars. “We’re always being courted by distributors,” he said. “It’s not our intention to sell in every state, but we are flattered.”
Most craft brewers pay a tax of $7 per barrel. The new bill would lower it to $3.50. For the very small number of craft breweries (less than 100) who brew more than 60,000 barrels a year, they would see a reduction in tax from $18 to $16 per barrel. If a brewer produced more than 2 millions barrels, like the Boston Beer Company who makes Samuel Adams, they’d pay the same $18 tax per barrel forked over by the giants like MillerCoors.
While the impact would be huge for craft brewers, the tax deal is unlikely to pass outside of more comprehensive tax reform. Craft brewers argue that the government support a quickly growing industry that’s creating jobs: Craft beer now claims 6.5% of the beer industry’s total market share and brought in $10.2 billion in 2012. 409 new breweries opened last year, and 1,200 breweries are in the planning stage: That’s a lot of jobs (and a lot of beer).