Statements on Introduced Bills and Joint Resolutionsby Senator Benjamin L. Cardin
Posted on 2015-02-04
CARDIN (for himself, Ms. Collins, Ms. Baldwin, Mr.
Cochran, Mr. Blumenthal, Mr. Kirk, Mr. Carper, Ms. Murkowski,
Mr. Casey, Mr. Portman, Ms. Cantwell, Mr. Coons, Mr. Heinrich,
Ms. Hirono, Mr. King, Mr. Leahy, Mr. Markey, Mr. Menendez, Mr.
Merkley, Ms. Mikulski, Mr. Murphy, Mr. Sanders, Mr. Schumer,
Mr. Wyden, and Ms. Klobuchar):
S. 375. A bill to amend the Internal Revenue Code of 1986 to provide
a reduced rate of excise tax on beer produced domestically by certain
qualifying producers; to the Committee on Finance.
Mr. CARDIN. Mr. President, I am pleased to rise today with my friend and colleague, the senior Senator from Maine, Senator Collins, to re- introduce the Small Brewer Reinvestment & Expanding Workforce Act of 2015, otherwise known as the Small BREW Act. Our esteemed former colleague, Senator Kerry, now Secretary of State, introduced this bill in the 112th Congress. I was honored to take up the mantel in the 113th Congress.
The Small BREW Act of 2015 would reduce the excise tax on America's craft brewers. Under current Federal law, brewers producing 2 million or fewer barrels annually pay $7 per barrel on the first 60,000 barrels they brew, and $18 per barrel on every barrel thereafter, one barrel = 31 gallons. The Small BREW Act would create a new excise tax rate structure that helps [[Page S776]] start-up and small breweries and reflects the evolution of the craft brewing industry. The rate for the smallest packaging breweries and brewpubs 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. Thereafter, the rate would be $18.00 per barrel. Breweries with an annual production of 6 million barrels or less would qualify for these recalibrated tax rates.
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. To put the matter in perspective, the biggest domestic craft brewer produces 2.7 million barrels of beer annually. Raising the ceiling that defines small breweries from 2 million barrels to 6 million barrels more accurately reflects the intent of the original differentiation between large and small brewers in the U.S. 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 multi-national competitors. Adjusting the excise tax rate would provide small brewers with an additional $67 million each year they could use to start or expand their businesses on a local, regional, or national scale.
This past November, the Joint Committee on Taxation, JCT, estimated the bill would cost $253 million through 2019 and $641 million over 10 years. A March 2013 study on the costs and benefits of the Small BREW Act bill which then-Harvard University economist John Friedman prepared on behalf of the Brewers Association, BA, indicates that the bill would directly reduce the excise tax revenue the Federal Government collects by $67.0 million the first year after enactment. But Professor Friedman notes that such a loss would be offset in large part by $49.1 million in new payroll and income taxes collected on increased economic activity. Professor Friedman believes that demand for craft beer will continue to increase and the Federal Government would collect an additional $1.1 million in excise taxes from the increased sales. The net revenue loss, therefore, would be $16.9 million the first year after enactment. The total net revenue loss over 5 years would be $95.9 million. The bill would lead to the creation of 5,230 new jobs in the first 12-18 months after passage and the cost of each new job in foregone revenue would be just $3,300.
While some people may think this is a bill about beer, it is really about jobs. Blue collar jobs and white collar jobs. Small brewers are small business owners in communities in each and every State across the country. Roughly 75 percent of Americans now live within 10 miles of a brewery. Nationally, small and independent brewers employ over 110,000 full- and part-time employees, generate more than $3 billion in wages and benefits, and pay more than $2.3 billion in business, personal and consumption taxes, according to the BA. As the craft beer industry grows so, too, does the demand for American-grown barley and hops and American-made brewing, bottling, canning, and other equipment. That demand creates more good jobs.
Maryland is home to 43 craft brewers, up from 34 in 2013, with 24 more in the planning stages. The existing breweries and brew-pubs employ roughly 600 people who were directly involved in producing craft beer in the State last year, and another 700 to 1,400 part-time workers including brew-pub restaurant staff and associated employees. In 2012, the Brewers Association determined that the economic impact of the craft brewing industry on the State was $455 million and that the industry created a total of 5,422 ``full-time equivalent'', FTE, jobs in Maryland, including indirect and induced jobs, paying over $185 million in wages. Based on 2013 production figures, the Small BREW Act would provide Maryland's small brewers with roughly $570,000 to reinvest in their growing businesses and hire more workers.
Small brewers have been anchors of local communities and America's economy since the start of our history. Indeed, there is a Mayflower document published in 1622 that explains why the Pilgrims landed at Plymouth Rock which states, ``For we could not now take time for further search or consideration: our victuals being much spent, especially our beer.'' Presidents from George Washington to Barack Obama have been homebrewers. Going back much further, the oldest extant recipe is for beer. And many people would argue that our thirst for beer is what drove man from being a hunter-gatherer to a crop cultivator since the earliest domesticated cereal grains were various types of barley better suited for beer production than making bread. Saint Arnulf of Metz, also known as St. Arnold, who lived from roughly 582 to 640 AD, is known as the ``Patron Saint of Brewers'' because he recognized that beer, which is boiled first, contains alcohol and is slightly acidic, was much safer to consume than water. French chemist and microbiologist Louis Pasteur, 1822-1895, who discovered yeast and propounded the germ theory that is the basis of so much of modern medicine, worked for breweries for much of his career. The pH scale, the standard measurement of acidity, was developed by the head of Carlsberg Laboratory's Chemical Department in 1909. Dr Soren Sorensen, 1868-1939, developed the pH scale during his pioneering research into proteins, amino acids and enzymes--the basis of today's protein chemistry. So it is fair to say that civilization and beer go hand-in- hand.
In addition to making high-quality beers, craft brewers such as Maryland's Flying Dog, Union Craft, Ruddy Duck, Baying Hound, Heavy Seas, and The Brewers Art create jobs and reinvest their profits back into their local economies. The Federal Government needs to be investing in industries that invest in America and create real jobs here at home. With more than 3,200 small and independent breweries and brew-pubs currently operating in the United States--and many more being planned--now is the time to take meaningful action to help them and our economy grow. An article in today's New York Times entitled ``Betting on the Growth of Microbreweries'' quotes BA economist Dr. Bart Watson as saying, ``Brewery after brewery is looking for ways to grow because when you talk to these companies, the biggest constraint is capacity. They're selling beer as fast as they can make it.'' Let us help them grow.
I am proud to announce that Senators Baldwin, Blumenthal, Cantwell, Carper, Casey, Cochran, Coons, Heinrich, Hirono, King, Kirk, Klobuchar, Leahy, Markey, Menendez, Merkley, Mikulski, Murkowski, Murphy, Portman, Sanders, Schumer, and Wyden have all signed on as original co-sponsors of the Small BREW Act, and I encourage the rest of my Senate colleagues to consider joining us in this worthwhile legislative endeavor.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be printed in the Record, as follows: S. 375 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Brewer Reinvestment and Expanding Workforce Act'' or as the ``Small BREW Act''.
SEC. 2. REDUCED RATE OF EXCISE TAX ON BEER PRODUCED DOMESTICALLY BY CERTAIN QUALIFYING PRODUCERS.
(a) In General.--Paragraph (2) of section 5051(a) of the Internal Revenue Code of 1986 is amended-- (1) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, and (2) by striking subparagraph (A) and inserting the following new subparagraphs: ``(A) In general.--In the case of a brewer who produces not more than 6,000,000 barrels of beer during the calendar year, the per barrel rate of tax imposed by this section shall be-- ``(i) $3.50 on the first 60,000 qualified barrels of production, and ``(ii) $16 on the first 1,940,000 qualified barrels of production to which clause (i) does not apply.
``(B) Qualified barrels of production.--For purposes of this paragraph, the term `qualified barrels of production' means, with respect to any brewer for any calendar year, the number of barrels of beer which are removed in such year for consumption or sale and which have been brewed or produced by such brewer at qualified breweries in the United States.''.
(b) Conforming Amendments.-- (1) Subparagraph (C) of section 5051(a)(2) of such Code, as redesignated by this section, is amended-- [[Page S777]] (A) by striking ``2,000,000 barrel quantity'' and inserting ``6,000,000 barrel quantity'', and (B) by striking ``60,000 barrel quantity'' and inserting ``60,000 and 1,940,000 barrel quantities''.
(2) Subparagraph (D) of such section, as so redesignated, is amended by striking ``2,000,000 barrels'' and inserting ``6,000,000 barrels''.
(c) Effective Date.--The amendments made by this section shall apply to beer removed during calendar years beginning after the date of the enactment of this Act.
______ By Mr. GRASSLEY (for himself, Mr. Blunt, Mr. Cruz, Mr. Hatch, Mr. Paul, Mr. Cornyn, Mr. Rubio, Mr. Inhofe, Mrs. Fischer, Mr. Flake, Mr. Lee, Mrs. Capito, and Mr. Gardner): S. 378. A bill to impose certain limitations on consent decrees and settlement agreements by agencies that require the agencies to take regulatory action in accordance with the terms thereof, and for other purposes; to the Committee on the Judiciary.