You can’t be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer. – Frank Zappa
There was a time when, if following Zappa’s criteria, the U.S. might not have been considered a real country. We might have had the airline bit down – and the football and nuclear weapons – but we were a bit lacking in beer. Other countries thumbed their noses at our beer industry, turning away with much the same attitude as they eschew coffee in Britain.
While it is true that beer had been brewed in the United States since before Europeans arrived – the Native Americans had quite the repertoire – the U.S. beer reputation was dubious at best. A few brewing companies made inroads inside the country, notably, D.G. Yuengling & Son, the oldest operating brewing company in the U.S., located just up the road a bit from me and owned by Forbes billionaire Richard Yuengling, Jr. (quick tip: order a Yuengling by saying “Ying-ling” and not “Yoong-ling” or “Yang-ling”), but U.S. beers outside of the country hardly got a mention.
Prohibition didn’t help matters. As of January 1919, all legal (*coughing*) brewing inside the U.S. stopped. By the time that the Twenty-First Amendment made it legal to brew, sell and transport beer again, many breweries had already closed up shop – or switched product. Those breweries that survived, like Anheuser-Busch – focused on big production and low cost. Those large scale breweries also used grains like rice and corn in their beers which produced a lighter, more bubbly beer, instead of wheat. The result? American beers were viewed as weak – in punch and flavor – substitutes to their European counterparts.
Beer lovers, however, weren’t content to sit back and drink bad beer. More than fifty years after Prohibition had all but crushed smaller breweries in the U.S., New Albion Brewing Company in Sonoma County, California, opened, offering more European style beers. The brewery – called a microbrewery because of its size – eventually failed but interest in micro brewing, or craft brewing, was ignited. In the next forty(ish) years, the number of breweries in the U.S. grew by 6500%.
Today, beer is the most popular alcoholic beverage in the U.S. As a country, we consume 205.8 million barrels per year, or about 20 gallons per person per year. And while sales of traditional beers (like those sold by Anheuser-Busch) remain flat or are decreasing, sales of craft beers continue to increase.
Brewers are hoping that a recent “beer tax-relief bill” will keep that momentum going. The Brewers Excise and Economic Relief Act of 2013 (the “BEER Act” – see how clever those politicians are?), H.R. 1918, would reduce excise taxes for all brewers and beer importers, especially small brewers. The bill, which was introduced by Rep. Tom Latham (R-IA) and Rep. Ron Kind (D-WI), is intended to ease the economic burden on the country’s 2,100 brewing companies.
The BEER Act calls for a reduction in federal excise taxes on brewers to its pre-1991 levels. That affects your wallet since, on average, 40% of the cost of every beer goes to federal, state and local taxes. If you’re wondering how that compares to other excise taxes, federal taxes make up less than 10% of the price of your gas – and in most states, the additional state tax burden remains relatively low. By the numbers, at .05 per 12 oz., the federal excise tax burden alone on beer works out to about 53 cents per gallon (for the sake of apples to apples, the federal gas tax is 18.4 cents per gallon).
The beer industry argues that is a steep tax burden for any product, especially one with a demographic where the average income is less than $50,000.
Under the BEER Act, small brewers would pay no federal excise tax on the first 15,000 barrels; small brewers would pay $3.50 on barrels 15,001 to 60,000; small brewers would pay $9 per barrel for every barrel over 60,000 and up to 2 million barrels; and for brewers producing more than 2 million barrels annually, and for all beer importers regardless of size, the federal excise tax rate would be $9 per barrel for every barrel. Except for small brewers, the current federal excise tax rate for beer is $18/barrel. A barrel of beer is the equivalent of 31 gallons.
The Beer Institute, the national trade association for the brewing industry, cheered the move, saying that it would encourage re-investment and foster economic growth. The beer industry has a $246.5 billion economic impact in the country. The beer industry directly and indirectly employs more than two million Americans, paying billions of dollars in wages and benefits.
The bill has wide ranging bipartisan support with 33 co-sponsors: 17 Republicans and 16 Democrats. The bill, which was introduced earlier this week, now moves to the House Committee on Ways and Means where I’m guessing some, er, extended research might be required.
Last Updated on