U.S. Senator Bob Casey (D-PA), a member of the Senate Finance Committee, pushed for legislation that would cut taxes for small breweries in Allentown and across the country. The Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act S. 917), would help small breweries like Allentown Brew Works by cutting the excise tax that small breweries pay. The legislation would help small breweries compete with larger competitors and has the potential to create jobs and add to the Lehigh Valley economy.
"This legislation is about helping smaller breweries create jobs and compete," Senator Casey said. "This part of our tax code hasn't been updated since 1976 yet the market has changed drastically. Smaller breweries like Allentown Brew Works are attracting customers with innovative, local products and it's critical that our tax system supports that effort. As a member of the Senate Finance Committee I'm going to work to get this bill on the Senate floor this year."
Brewers generally pay an $18 excise tax on each barrel brewed (one barrel is 31 gallons). Small brewers (those that brew fewer than 2 million barrels of beer a year) pay a reduced excise tax of $7 per barrel for the first 60,000 barrels of beer they brew each year. The proposed bill would reduce the excise tax applicable to brewers producing up to 6 million barrels per year in two ways. First, the tax rate applicable to the first 60,000 barrels would be reduced to $3.50 per barrel. Second, the tax rate on additional barrels below 2 million per year would be reduced to $16. The small brewer threshold and tax rate were established in 1976 and have never been updated. Since then, the annual production of America's largest brewery increased from 45 million barrels to 105 million barrels. 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.
A March 2013 study at Harvard University highlighted the economic benefits of the bill:
The proposed reduction in the federal excise tax on beer produced by small brewers (i.e., brewers producing up to 6 million barrels of beer per year) would increase economic activity by $183.1 million in 2013 and $1.04 billion over five years.