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HR 4278 - Small Brewers Stimulus Bill

"Small Brewers Stimulus" H.R. 4278
Imagine that, bipartisanship can happen as long as craft beer is involved. HR 4278 is a graduated excise tax reduction bill introduced by Rep. Neal (D-MA) and Rep. Brady (R-TX). The wording of the bill will give brewers who produce less than 60,000 barrels/year a federal excise tax cut from $7/barrel to $3.50/barrel. Between 60,000 and 2,000,000 barrels per year will get a rate cut from $18 to $16 per barrel produced.

Strengthen Small Businesses and Preserve American Jobs

The Brewers Association seeks to promote and protect small, independent American brewers, their craft beers and the community of brewing enthusiasts. The Brewers Association represents 1,516 small and independent brewers across the nation. America's small and independent brewers include 63 brewing companies that produce between 15,000 and 6 million barrels of beer per year at their 238 breweries, 474 microbreweries that produce less than 15,000 barrels per year, and 812 brewpubs (brewery restaurants) that sell 25% or more of their beer on site. By comparison, the largest brewer in America produces 107 million barrels per year domestically and more than 300 million barrels worldwide.
Nationally, small and independent brewers employ nearly 100,000 full- and part-time employees and generate more than $3 billion in wages and benefits and pay more than $2.3 billion in business, personal and consumption taxes. These brewers are vital small businesses in communities across the country, typically employing 10 to 50 employees.
Consumer demand for the bold and innovative beers brewed by America's small brewers has grown significantly in recent years. But beer produced by small, independent brewers still represents less than 5% of the beer sold nationwide. As small businesses, small brewers face many economic challenges. Because of differences in economies of scale, small brewers have higher costs for production, raw materials, packaging and market entry than larger, well-established, multi-national competitors. Furthermore, efforts to increase state taxes for all brewers continue to threaten jobs and their economic stability.
To help strengthen American small businesses and preserve Main Street jobs, the Brewers Association supports legislation to reduce the federal beer excise tax rate for America's small brewers.
  • Currently, a small brewer that produces less than 2 million barrels of beer per year pays $7.00 per barrel on the first 60,000 barrels produced each year. Reducing this rate to $3.50 per barrel would provide approximately $18.0 million per year to help strengthen our nation's smallest brewers and support their efforts to maintain and generate jobs.
  • Once production exceeds 60,000 barrels, a small brewer must pay the same $18 per barrel excise tax rate that the largest brewer (at over 100 million barrels) pays. Lowering the tax rate to $16 per barrel on beer production above 60,000 barrels up to 2 million barrels would provide small brewers with an additional $26.2 million per year that would be used to support significant long-term investments and create jobs by growing their businesses on a regional or national scale.
  • 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. The ceiling defining small breweries is 2 million barrels. We support raising this ceiling to 6 million barrels to more accurately reflect the intent of the original differentiation between large and small brewers in the U.S. 

The Brewers Association urges you to co-sponsor H.R. 4278/S. 3339, legislation to create a graduated beer excise tax rate of $3.50 and $16 for America's small brewers. During the 111th Congress, more than 240 U.S. Representatives have shown their support for small brewers by joining Reps. Pomeroy and Latham in sponsoring legislation to reduce both of the beer excise tax rates paid by small brewers (H.R. 836, the Brewers Excise and Economic Relief Act of 2009). We strongly encourage Members of Congress to extend the same level of bi-partisan support to H.R. 4278 and S. 3339.


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