The beer industry is one of the jewels of America’s manufacturing sector, supporting more than 2.1 million jobs, 559,545 of which come from the craft industry. Breweries operate in every state and nearly every congressional district in the country. Congress and President Trump have recognized brewers’ economic benefits, and in 2017, they provided two years of federal excise tax relief to every American brewer and beer importer. These tax savings have provided more than $100 million in savings for brewers to reinvest, which has contributed hundreds of millions of dollars of economic investment into communities across the country.
Unfortunately, without congressional action, on Jan. 1, large and regional beer suppliers will see their excise tax payments go up by an average of 4%, and 99% of U.S. breweries will see their excise taxes double. For the more than 2,000 new brewers who opened their doors after the lower federal excise tax was enacted, this tax increase will be a huge financial burden.
As the number of days left in 2019 dwindle, brewers and beer importers need to finalize their business plans for 2020, and it is imperative that Congress either extend or make this tax relief permanent as soon as possible.
Since the tax relief went into effect, America’s brewers have used the savings to invest in their businesses and to maintain and generate jobs across the nation.
- Braxton Brewing in Kentucky not only upgraded its employee benefits, providing above-average costs-of-living raises to all employees in 2018, but it also hired two new team members and invested in new equipment.
- Night Shift Brewing outside Boston saved nearly $140,000 and funded a construction loan for a brand-new taproom and brewery. On top of that, it was able to add more than 100 new jobs across the business.
- Wolf’s Ridge Brewing in Columbus, Ohio, added cellar capacity, hired two employees, and opened a second location, which will significantly increase production capacity and lead to the hiring of six to 10 additional employees over the next year. The company also added a 401(k) program.
- 4 Hands Brewing in St. Louis added three full-time positions, upgraded its canning line, and bought a new keg washer. It also focused on employee benefits and compensation and now provides employees with full health coverage and a 401(k) that sees a 3% contribution from the company with no match needed.
- Peace Tree Brewing in Iowa seized its opportunity to grow, adding fermentation space and hiring another employee.
These are real stories and tangible evidence of the positive effects the tax relief has had for brewers. The uncertainty surrounding the tax rate, however, threatens this success. Brewers cannot forecast their next year, let alone their next five, without knowing their federal excise tax rate. Any further delay in extending or making the tax permanent means brewers must stall their plans for investment and expansion. These businesses may even be forced to make decisions that could very well unravel much of the growth seen in recent years.
Voters agree that Congress should take action and not increase taxes on the beer industry, with a November survey by Quadrant Strategies showing more than two-thirds of Americans, including majorities of conservative, moderate, and liberal voters, want Congress to extend the current excise tax rates for brewers and beer importers.
The good news is an unprecedented bipartisan coalition of senators and members of the House of Representatives are working together to make sure brewers will continue to benefit from federal excise tax relief. Democratic Sen. Ron Wyden and Republican Sen. Roy Blunt, along with Democratic Rep. Ron Kind and Republican Rep. Mike Kelly, have led the way by reintroducing the Craft Beverage Modernization and Tax Reform Act, legislation that would make this tax relief permanent for all our nation’s brewers and beer importers. With less than a month to go before expiration, 74 senators and more than 320 representatives across the country and the ideological spectrum have added their names in support.
A dramatic tax increase would mean our nation’s more than 7,700 active brewers and beer importers would bid farewell to tax savings that have supported the industry and created more than 150,000 new jobs in the craft brewing industry alone since enacted.
If Congress extends or makes the lower federal excise tax permanent, small and large brewers across America can rest assured and continue to do what dynamic business leaders do best: plan, invest, innovate, grow, and thrive.
As leaders of the Brewers Association and the Beer Institute, we have long advocated for extending or making permanent tax relief for our nation’s brewers. We strongly urge Congress to do whatever it takes to pass this critical legislation before Dec. 31 and provide economic certainty to the brewing industry for years to come.
Bob Pease is president and CEO of the Brewers Association, a national trade association representing more than 5,400 small and independent brewers. Jim McGreevy is president and CEO of The Beer Institute, a national trade association for America’s brewing industry, representing brewers of all sizes, as well as beer importers and industry suppliers.
