The Republican tax cut plan, often criticized for being mostly about big corporations and the rich, isn’t all bad. It contains a modest reduction in the federal excise tax on beer makers — one that would yield a noticeable savings for craft brewers in our region.
The Senate version of the GOP tax overhaul provides a two-year reduction on the tax that beer makers pay to the federal government for every barrel of product. For the smallest brewers, it could save a few thousand dollars a year, from $2,800 for Element Brewing in Millers Falls to closer to $8,000 for Lefty’s in Greenfield or as much as $70,000 for Berkshire Brewing Co. in Deerfield. For such small businesses, these are not insignificant savings.
Should the Senate cut become law when the House and Senate tax bills are blended, the excise tax on microbrewers like those in Hampshire and Franklin counties would drop from $7 a barrel to $3.50 on the first 60,000 barrels produced annually. However, that would expire after Dec. 31, 2019.
Mike Yates, the head brewer at Building 8 Brewing in Florence, said last month that the reduced excise tax would be helpful. “That’s real money. Everything adds up.”
Yates said that this year Building 8 made 1,500 barrels of bear, and the plan is to increase that to 2,200 next year.
Yates added that the excise tax cut would boost the craft brewery business across Massachusetts, because there are few brewers in the state that make more than 60,000 barrels a year.
Democratic Congressman James McGovern, of Worcester, has advocated for these same excise tax cuts in a bill before Congress, HR747, the Promote Craft Beverage Modernization and Tax Reform Act of 2017. It seeks the same cuts and other benefits for microbrewers, but permanently.
In support of the tax cut, McGovern has noted that local breweries provide their communities with jobs and drive tourism. According to McGovern’s office, the 110 Massachusetts craft breweries support 16,220 jobs, with an average $49,008 salary per employee, and their economic impact totals $1.83 billion. The state ranks 17th in the country in the number of craft breweries.
McGovern’s office has said that while inclusion of the brewery tax cut in the GOP bill is a positive development, the congressman will not support the Senate tax bill.
“Congressman McGovern would welcome a genuine effort to pass bipartisan tax reform, but the current bill is just another shameless giveaway to billionaires and corporations at the expense of hardworking families,” said a spokesman.
At least one local brewer agrees with that sentiment. Chris Sellers, head brewer at The People’s Pint in Greenfield, which brews about 1,000 barrels a year, said the excise tax cut would result in “significant savings” for the business.
Speaking for himself, though, Sellers said it’s not worth it if contained in “a really conservative tax plan,” citing the substantial cuts the Republican plan offers to large corporations.
We also would welcome a different tax bill, one that truly and directly benefits the middle class, but if we can’t have that, then we’ll take whatever benefits this Republican bill grants our local mom-and-pop brewers.
At the same time, we urge McGovern and other federal lawmakers to follow through on current efforts to enact HR747, which would make permanent this sensible tax cut for small breweries.