Remember that $787 Billion Stimulus package that congress passed in 2009? Under the scrutinizing eye, it was in fact a tax, not a stimulus…the United States has yet to feel the pain of payback; however. Regardless, free taxpayer money seems to be synonymous with “stimulus” these days. What does a yet unpaid for tax stimulate? Apparently not jobs, since the U.S. Unemployment Rate is hovering high still (higher than before the bills passage) at around 9.5% nationwide.
I say all this not to lead into a political discussion, but a beer discussion. Reading through my news feeder, a gripping headline caught my eye: Beer Stimulus: Can Hops and Barley Create Jobs? The use of the term Stimulus forced me into the guts of the article, as modern context led me to think the federal government was giving out future tax money to the beer industry. Such isn’t the case, the term is being used improperly in regards to a tax break.
The benefit of tax breaks is that they DO encourage long lasting residual income for the populous and the taxman. The problem with tax breaks, is that someone, somewhere, from some niche or industry or socio-economic strata writhes in anger at the unfairness. Perhaps the canned widgets industry gets upset because they did not receive their tax break.
Well, we can forget about the canned widgets guy…let ME be the one to harp on the fairness issue.
As the referenced article the bill (HR 4278) is actually relief from the heavy handed excise tax. As we should all know, an excise tax is a tax levied upon an industry in addition to standard taxes, typically in order to pay for a debt or service. How is that fair? Especially unsettling, is the fact that the excise tax on alcohol that ravages small breweries (Allagash Brewery claims to pay more than $150,000 per year in addition to FICA, Medicare, and all the other slew of taxes) was actually enacted to pay off debt incurred from the REVOLUTIONARY WAR. Ummm…that war ended nearly 230 years ago.
Don’t you think the excise tax should have been lifted by now? The truth is, once a tax is enacted, the beneficiaries will be hard pressed to pass up that cash, especially as more debt is incurred. So in reality, should the bill pass, the playing field would be a bit more level between a brewery and any non-excise industry. I say “a bit” because the excise tax would still be in place, just reduced.
But who might feel the twinges of jealousy at the fair luck of the craft brewers?
The macro brewers. HR 4278 is designed to benefit breweries who produce less than 6 million barrels a year. Sorry Bud. Let’s face it, our nation is in debt over our heads. Debt aside, our spending to GDP (Gross Domestic Product) is currently at 41.5%, a dangerously high level. In fact, the collapsed Greece’s spending to GDP is only a tad higher at 51.7%. The recommended level is 25%. Congress is worried. They are willing to take a risk and see if making loosening up some of the financial shackles on small brewers will enable them to hire more workers, hopefully leading to growth and sustained future taxable income.
This is not what the MacroBrewers want. They enjoy being emperors of the world. Like any mad emperor, any threat, no matter how seemingly insignificant, must be stamped out. From the ABC article:
The Beer Institute, a lobby group that represents the larger breweries like Anheuser-Busch Inbev, says it doesn’t support Neal and Brady’s proposed legislation, but that it welcomes some changes to the beer excise tax structure that will help reduce the tax burden on manufacturers.
“Congressman Neal’s bill is another indication that members of the U.S. House of Representatives support beer excise tax relief,” the Beer Institute says. “In 2008, members of the beer industry paid more than $41 billion in taxes at all levels of government and provided jobs to 1.9 million Americans. Congressman Neal’s bill will foster and promote growth for brewers who provide manufacturing jobs to hard working Americans.”
With the market share they are captive of, big breweries, like InBev, make more than enough money to cough up the excise tax and still stuff their pockets: Not so for the craft brewer. Obviously the craft brewer is a threat, as they are not backing the bill.
Well, I’m sorry you didn’t catch a break, big guys…it’s not a fair world our society gravitates towards a Robin Hood mentality. Regardless, I am thrilled that some of the struggling brewers who sacrifice to put good beer in my cup may be given a chance to grow and leave a legacy, and as a guy who shoots to be in the industry soon, I know this will increase my odds of surviving. I am calling my congressmen/women and encouraging them to allow our craft brewer friends to stop paying for our centuries old war with the British.
For more info, check out http://startingabrewery.wordpress.com/2010/03/22/federal-legislation-h-r-4278-you-can-help/