The summer healthcare debate in Congress was a raging shit blizzard, but (hopefully) the deliberation over tax reform should be less fecal-storm worthy. Legislation has not been introduced yet, but democrats have somewhat signaled they’d be interested in getting something accomplished in their lifetimes (i.e. a bipartisan bill that didn’t cut taxes for the wealthy, raise the deficit or pump kick programs like Medicare and Social Security). If you’re not caught up: The GOP has plans to tackle tax reform when they return from their (um) August recess (perfect word for it), which will be on Sept. 5. The GOP has indicated they would like to a) lower taxes rates (from corporate to individual taxes), b) eliminate certain taxes altogether and c) eliminate fatty tax breaks to generate revenue.
This is bad news for the beer industry, which has been backing the Craft Beverage Modernization and Tax Reform Act (CBMTRA) for a few years now in some form or another. If made into law, the CBMTRA would:
- Reducing the federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually.
- Reducing the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and all beer importers.
- Keeping the excise tax at the current $18 per barrel rate for over 6 million barrels.
Expanding the list of ingredients that could be automatically included in beer without federal government approval.
- Allowing small, unaffiliated brewers to greater collaborate on new beers by giving them the flexibility to transfer beer between breweries without tax liability.
Unfortunately, it looks like Congress will be busy restructuring the big picture of taxes and will have little interest in a) focusing on industry-specific tax dilemmas and b) adding bigger loopholes for money to fall out of. U.S. Rep. Diana DeGette talked about this earlier in the week at a gathering of Denver-area brewers. She noted this act is going to float around for a bit, but it’s still very passable (especially with so much support). She gave two scenarios. From the Denver Business Journal:
First, the bill could be wrapped into any omnibus piece of tax-reform legislation, as a number of similarly targeted tax breaks are likely to try to be attached to any bill if it looks like it could achieve success. But DeGette acknowledged to the crowd of roughly 30 brewing-industry leaders at Strange Craft Beer Co. in Denver that a bill so specific as House Resolution 747 could “get lost” when Congress is considering a much bigger subject.
More likely, she said, is the prospect that a package of industry-focused bills with bipartisan support could gather support and move through Congress after the passage or failure of comprehensive tax reform.
CBMTRA was reintroduced this year and has 252 co-sponsors in the U.S. House of Representatives — 149 Republicans and 103 Democrats — which is a crazy amount. In fact, that’s 34 more votes than it needs to pass through the House, which makes this waiting game kind of a bummer.