U.S. Sen. Tammy Baldwin
Press Release

U.S. Senator Tammy Baldwin Joins Bipartisan Effort to Grow America’s Craft Beer Industry

Small BREW Act would enable Wisconsin’s craft breweries to reinvest over $1.5 million into their businesses each year

By - Feb 5th, 2015 01:05 pm

(WASHINGTON, D.C.) – U.S. Senator Tammy Baldwin (D-WI) has joined a bipartisan effort in the United States Senate, led by Senators Ben Cardin (D-MD) and Susan Collins (R-ME), to reintroduce S. 375, The Small Brewer Reinvestment and Expanding Workforce Act or Small BREW Act that will stimulate regional economies nationwide with a reduction in the excise tax on each barrel of beer brewed by small brewers.  The bill also changes the threshold definition of a small brewer to better reflect modern production.

“Wisconsin’s brewers have been at the center of our culture and anchors of local communities since our state’s beginning,” said Baldwin. “They create jobs and reinvest their profits back into their local economies and we need to be investing in them. I’m proud to support tax relief for craft brewers across Wisconsin in order to help create jobs and grow our Made in Wisconsin economy.”

“Wisconsin is home to over 100 small and local craft breweries and while they produce less than 5% of the beer brewed in Wisconsin, they supply a majority of the brewing jobs which are located in every part of our state,” said Mark Garthwaite, Wisconsin Brewers Guild Executive Director. “Growth in Wisconsin’s craft brewing sector means an increase in employment opportunities and the Small BREW Act will provide an additional hiring boost that will facilitate continued and vibrant growth that benefits the broader Wisconsin economy.”

The Brewers Association determined in 2012 that the economic impact of the craft brewing industry in Wisconsin was $856 million. Accounting for growth since that time, that figure is likely to have surpassed $1 billion. The Small BREW Act would enable Wisconsin’s craft breweries to reinvest over $1.5 million into their businesses each year which would facilitate additional hiring to keep pace with the growing demand for craft beer produced in local communities. Wisconsin craft breweries already attract well over a million visitors to their facilities every year and tourism dollars fueled by the growth of craft brewing will provide economic opportunities in communities all across the state.

WATCH: During American Craft Beer Week 2013, Baldwin sat down with Sprecher Brewing Company President Jeff Hamilton to discuss the legislation and how it impacts Wisconsin’s economy.

The Small BREW Act of 2015 would reduce the federal excise tax on every one of America’s small craft brewers. Under current federal law, brewers producing fewer than 2 million barrels annually pay $7 per barrel in federal excise taxes on the first 60,000 barrels they brew, and $18 per barrel on every additional barrel (one barrel = 31 gallons). Under the Small BREW Act, the rate would be $3.50 per barrel on the first 60,000 barrels.  For production between 60,001 and 2 million barrels, the rate would be $16.00 per barrel.  Then, the rate would be $18.00 per barrel.   Breweries with annual production of 6 million or fewer barrels would qualify for these new tax rates.

Joining as original cosponsors of the Small BREW Act are Senators Thad Cochran (R-Miss.), Richard Blumenthal (D-Conn.), Mark Kirk (R-Ill.), Tom Carper (D-Del.), Lisa Murkowski (R-Alaska), Bob Casey (D-Penn.), Rob Portman (R-Ohio), Maria Cantwell (D-Wash.), Chris Coons (D-Del.), Martin Heinrich (D-N.M.), Mazie Hirono (D-Hawaii), Angus King (I-Maine), Patrick Leahy (D-Vt.), Ed Markey (D-Mass.), Bob Menendez (D-N.J.), Jeff Merkley (D-Ore.), Barbara A. Mikulski (D-Md.), Chris Murphy (D-Conn.), Bernie Sanders (I-Vt.), Charles Schumer (D-N.Y.), Ron Wyden (D-Ore.) and Amy Klobuchar (D-Minn.).

There are now more than 3,200 small and independent breweries in the United States, with approximately 1.5 more opening every day, according to the Brewers Association. Even though these small breweries represent about 12 percent of the U.S. beer industry in volume terms, they now represent the majority of jobs in beer. In 2013, craft breweries directly employed 110,273 people. They had a total economic impact of more than 360,000 full-time equivalent jobs generating more than $3 billion in wages and benefits; and paying more than $2.3 billion in business, personal and consumption taxes in towns and cities across America.

Because of differences in economies of scale, small brewers have higher costs for raw materials, production, packaging, and market entry compared to larger, well-established multinational competitors. Adjusting the excise tax rate would provide small brewers with an additional $65-$70 million each year they could use to start or expand their businesses on a local, regional, or national scale.

An economic impact study by then-Harvard University’s Dr. John Friedman (now at Brown University) found that the bill would generate $183.1 million in economic activity in the first year and almost $1.04 billion over five years and would also create nearly 5,230 jobs in just the first year.

The small brewer threshold and tax rate were established in 1976 and have never been updated.  Since then, the largest multinational producer of beer has increased its annual production from 45 million barrels to 97 million barrels domestically and 325 million barrels globally.  Raising the ceiling that defines small breweries from two million barrels to six million barrels more accurately reflects the intent of the original differentiation between large and small brewers in the U.S.

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