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The Fair BEER Act is a Red Herring Introduced by Big Brewers

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Why the similar-sounding Small BREW Act is a better bet for crew brewers.

Shutterstock/Jake Hukee

According to craft beer-promoting trade group the Brewers Association, at the end of 2014 there were 3,464 breweries operating in America. The organization defined the vast majority of these producers as small, independent and traditional craft breweries. And while micro brewing has become big business over the last decade, beer still remains the second most consolidated manufacturing industry in America. A staggering 89.5 percent of the market is controlled by the top four companies.

And that's why Senators Susan Collins (R-Maine) and Ben Cardin (D-Maryland) introduced the "Small Brewer Reinvestment and Expanding Workforce Act" (Small BREW Act, for short) this year, supported by the Brewers Association and designed to restructure taxes to further encourage growth for job-creating small breweries.

Overall, the craft beer industry contributed $33.9 billion to the U.S. economy in 2012.

Collins told Portland, Maine's WCSH6 in a recent interview, "What I'm trying to do with that is give a boost to this industry which is becoming really important in our state. In fact there are nearly 1,500 people who work in the craft beer industry in the state of Maine." She continued that the implications of craft beer go well beyond breweries, aiding farmers, suppliers and more. In 2012, the craft brewing industry's economic impact on Maine alone was $327,709,000, generated from just 37 breweries (though now the state has closer to 60 breweries). Overall, the craft beer industry contributed $33.9 billion to the U.S. economy in 2012.

However, shortly after Collins and Cardin proposed the Small BREW Act, Representatives Steve Womack (R-Arkansas) and Ron Kind (D-Wisconsin) floated another bill named the "Fair Brewers Excise and Economic Relief Act of 2015" (or Fair BEER Act). Also ostensibly in support of fostering growth of micro breweries, this one goes a step further than its counterpart, cutting taxes entirely for craft brewers up to a certain size.

Interestingly, the act is supported by multinational powerhouses like Anheuser-Busch InBev (which owns Budweiser, among others) and MillerCoors, as well as the Beer Institute, which lobbies for the beer industry as a whole. Why would these organizations want to eliminate taxes on their small rivals?

In reality, the Fair BEER Act also includes tax breaks for large brewers, unlike the Small BREW Act. Maine Brewers' Guild Executive Director Sean Sullivan told Eater it's "politicking at its worst":

The Fair BEER Act is essentially a red herring. It proposes an unrealistic amount of tax cuts that predominantly benefit the biggest players in the industry — also known as the only breweries who are cutting jobs and shipping profits offshore (and are, in some cases, owned by foreign-controlled conglomerates).

Sullivan believes that the Fair BEER Act's extreme cuts make it unlikely to pass, something its supporters don't mind. If legislators and business people advocate for the Fair BEER Act over what Sullivan calls the "realistic, common sense proposal" in the Small BREW Act, they'd be backing a horse intended to lose, he contends.

Sullivan said "small breweries aren't opposed to paying taxes per se," they're looking to realign tax structure to give them an edge in an important growth phase. A recent press release from Small BREW Act co-sponsor Senator Angus King (I-Maine) notes that "Even though these small breweries represent about 12 percent of the U.S. beer industry in volume terms, they now represent the majority of jobs in beer. In 2013, craft breweries directly employed 110,273 people."

With a more favorable tax situation, these breweries would be in a better position to capitalize on the American consumers' insatiable desire for locally made craft beer, which boosts the local economy. How can fans support the legislation? Collins, who revealed she prefers Belgian styles rather than hop-heavy varieties, advised, "I think we ought to support our local businesses in general. And I think that's happening with the craft breweries."