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Monday, December 23, 2013

Never Talk Politics or Taxes at Christmas

Do it a day and a half before. 

This has been percolating for a long time, but it is perhaps gathering strength.  (Since Congress is frozen by trench warfare, maybe a tax cut that benefits small businesses principally clustered in blue states is just the ticket.)
At issue is a tax that the federal government assesses on a few products like beer, wine and gasoline and gets included in the price. The excise tax on beer is $7 per barrel for the first 60,000 barrels and $18 per barrel on anything above that. A barrel is a standard unit of measure in the beverage industry and contains 31 gallons of beer.
The Small Brew Act, co-sponsored by 136 House members, would reduce the levies to $3.50 per barrel on the first 60,000 barrels of beer, and to $16 per barrel on 60,000 to 2 million barrels. The current $18 rate would be retained on production exceeding 2 million barrels, under the measure.
DeFazio tours the OSU Fermentation
Sciences Lab. I believe that lanky gent
to his right is the illustrious hop
researcher, Tom Shellhammer.
If you don't follow politics, this is a fantastic way to introduce yourself to small-bore regional horse-trading.  It's not really an issue that cuts along ideology: it cuts along geography.  
Making the case for the nation’s 2,700 microbreweries is the House Small Brewers Caucus, founded in 2007 by Oregon Reps. Peter DeFazio, a Democrat, and Greg Walden, a Republican.
Since this would lower the tax burden for 100% of Oregon's breweries (though in different degrees), both congressmen are high on it.  Who is not high on it?  Congressmen with large breweries in their states:
The two beer giants, Belgium-based Anheuser Busch-InBev, the maker of Budweiser, Corona, Beck’s and Stella Artois, and Chicago-based MillerCoors, whose parent companies are headquartered in Denver and England, have put their political muscle behind legislation that would halve the excise tax for all brewers, regardless of size.
The BEER Act, introduced in May by Sen. Mark Udall, D-Colo., has eight co-sponsors. A House companion, filed by Iowa Republican Tom Latham, has 72 backers.
The  economics are pretty obvious.  It's more expensive to make beer in smaller amounts, so tiering the tax structure does something to remove the advantage of very large, efficient breweries.  That means the price of a sixer of Budweiser and Ninkasi creep closer together at the grocery store, which is of course great if you're Ninkasi.  The question is: should Washington be artificially leveling the playing field?  This is a purely philosophical question.  Or, if you're a congressman, a regional one.


  1. Uhh, unless the absolute goal is to punish big breweries with high taxes, it seems to me that the BEER act is better for everyone.

    What am I missing here?

  2. I can't imagine this dysfunctional Congress passing anything that helps small business. It's not in their DNA.