[Congressional Record Volume 159, Number 65 (Thursday, May 9, 2013)]
[Senate]
[Pages S3331-S3332]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CARDIN (for himself, Ms. Collins, Ms. Baldwin, Mr. Begich, 
        Mr. Cochran, Mr. Coons, Mr. Cowan, Mr. Menendez, Mr. Merkley, 
        Ms. Mikulski, Mr. Sanders, Mr. Schumer, Mr. Tester, Mr. Wicker, 
        Mr. Wyden, Mr. Carper, Mr. Portman, and Mr. King):
  S. 917. 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, next week is American Craft Beer Week so I 
am pleased to rise today with my friend and colleague, the senior 
Senator from Maine, Senator Collins, to introduce the Small Brewer 
Reinvestment & Expanding Workforce Act of 2013, 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 am 
honored to take up the mantel.
  The Small BREW Act of 2013 would reduce the excise tax on America's 
craft brewers. Under current federal law, brewers producing fewer than 
2 million 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 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 annual production of the 
largest U.S. brewery has increased from 45 million barrels to 105 
million barrels. Raising

[[Page S3332]]

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 regional or national scale.
  Three years ago, the Joint Committee on Taxation, JCT, scored the 
bill at roughly $33 million annually and $324 million over 10 years. A 
more recent, March 2013, study on the costs and benefits of the House 
companion bill that Harvard University economist John Friedman prepared 
on behalf of the Brewers Association indicates that the bill would 
directly reduce the excise tax revenue collected by the Federal 
Government by $67.0 million in 2013. 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 the increased economic activity. 
As craft beer prices decline, demand would rise and the Federal 
Government would collect an additional $1.1 million in excise taxes 
from the increased sales. The net yearly revenue loss, therefore, would 
be $16.9 million in 2013. 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. Small brewers are small business owners in communities in 
each and every State across the country. Nationally, small and 
independent brewers employ over 108,000 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 Brewers Association. 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.
  Maryland is home to 29 craft brewers, with at least 24 more in the 
planning stages. According to the Brewers Association of Maryland, 
there were 342 people employed full-time who were directly involved in 
producing craft beer in the State last year, and another 1,420 people 
employed full or part-time who were indirectly involved, including 
brew-pub restaurant staff and associated employees. The brewing 
industry accounted for $8.9 million in State excise taxes and $56.7 
million in Federal excise taxes, paid some $13 million in wages, and 
generated nearly $95 million in economic activity.
  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, 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. S