[Congressional Record Volume 161, Number 19 (Wednesday, February 4, 2015)]
[Senate]
[Pages S775-S777]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. 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

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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--

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       (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.
                                 ______