Taxes: Beer’s most expensive ingredient

A Belfast Bay Lobster Ale overflows a glass at the Bangor Beer Festival in this June 2013 file photo.
Carter F. McCall | BDN
A Belfast Bay Lobster Ale overflows a glass at the Bangor Beer Festival in this June 2013 file photo. Buy Photo
By Joe McClain, Special to the BDN
Posted Aug. 19, 2013, at 11:17 a.m.

American beer drinkers know that the building blocks of all great-tasting beers include grains, hops, yeast and water. But they probably don’t know that more than 40 percent of what Americans pay for a beer goes toward a hidden ingredient — taxes.

We can’t find these taxes on a receipt. They are invisible and regressive, meaning lower- and middle-income people disproportionately and unfairly feel the pinch.

Thankfully, the bipartisan Brewers Excise and Economic Relief Act of 2013, or “BEER” Act, would reduce the federal excise tax on beer drinkers and protect them from future tax hikes.

As it stands today, the federal excise tax on beer is hitting beer drinkers — and the network of brewers, beer importers, raw material suppliers, wholesalers and retailers — at twice the historic rate due to an unprecedented revenue grab by Congress that raised the excise tax on luxury goods such as yachts, personal airplanes, high-priced automobiles and … beer.

In recent years, all other “luxury” tax increases have been repealed, but the beer tax has remained at a historic high. There is no reason why beer drinkers, brewers, importers and the dozens of businesses that support them should have to pay more than their fair share of taxes. That is why the BEER Act serves such an important role, and why all members of Congress should join one of its co-sponsors, Rep. Mike Michaud of Maine, in supporting it.

Today’s brewing industry represents an enormous contribution to the nation’s economy. More than 2 million Americans are at work because of beer — from farmers to factory workers, brewers to bartenders. In fact, for every one job at the brewery or beer importer, there are another 45 jobs in other industries including agriculture, marketing, engineering, manufacturing, warehousing, transportation, concessions and retail, just to name a few.

All told, the economic contribution from making, importing and selling beer in America provides nearly $874,000 in economic activity in Maine alone.

The BEER Act is fair, equitable and comprehensive, meaning it will serve every part of the industry, from the start-up brewer to the thousands of workers in good-paying jobs at America’s major breweries. It will also encourage expansion, reinvestment and further job creation.

The BEER Act would roll back the federal excise tax from its historic peak of $18 for every 31-gallon barrel to $9 a barrel, benefitting the vast majority of beer drinkers in the United States. For brewers producing fewer than 2 million barrels annually, the rate would be slashed to $3.50 on the first 60,000 barrels; and for those brewing fewer than 15,000 barrels, the federal excise tax would be eliminated entirely.

In 1977, with the support of major brewers, Congress cut the federal excise tax on brewers of fewer than 2 million barrels annually. Reducing the federal excise tax was seen as a means of “creating a pathway to the marketplace” for new brewers — and it worked. At the time, there were 49 brewers in business throughout the United States. Today, we count more than 2,700.

We have before us another opportunity to foster a great American industry, create much-needed domestic jobs and protect taxpayers from having to pay even more in hidden taxes for what should be the everyday pleasure of an affordable (and cold) beer. That opportunity is the BEER Act, and it deserves your support.

Joe McClain is president of the Beer Institute, a trade association for the beer industry.

http://bangordailynews.com/2013/08/19/opinion/contributors/taxes-beers-most-expensive-ingredient/ printed on April 16, 2014