Wednesday, April 24, 2013

Craft Brewers Want a Tax Cut and Think They Deserve One – Why

Because They Want One - What More Reason Do You Need?

Nobody likes paying taxes, and every business that is taxed argues not that they don’t like paying taxes, but that cutting their taxes will improve things for the industry and the economy.  And if those whose taxes are cut have to suffer a financial gain, well that’s the price they are willing to pay to advance their industry.

Almost no industry has succeeded like the small craft brewers that now inhabit every major American city.  And this success has come in spite of difficult economic times, which make a $3.00 glass of beer (indistinguishable in The Dismal Political Economist’s palate from a nice frothy Pabst) a hard sell.  But prosper the industry has.

Now alcohol has always attracted the attention of governments looking for tax revenues, for the simple economic reason that economists call price inelasticity.  Strip away the academic pretentiousness and this means that alcohol can be taxed without a large effect on consumption because people will pay the higher price.  So this means revenue for governments, and benefits for everyone when alcoholic consumption is reduced by the tax.

Riding Wave of Popularity, Craft Brewers Ask Congress for a Tax Cut

But the Craft Brewing industry wants a tax cut.

The Small BREW Act would reduce the tax on the first 60,000 barrels to $3.50. For every barrel beyond 60,000 but before two million, the tax would be $16. After two million, breweries would pay the full $18 tax. Any brewery that produces fewer than six million barrels a year — which includes the bigger craft players, like the Boston Beer Company, maker of Samuel Adams, which turned out 2.7 million barrels last year — would be eligible for the tax reduction.

And of course they say it’s not for them, it’s for the economy, for employment, for the children (ok maybe not for the children), for everybody else.  But really, it’s for them.  That why tax breaks exist, to benefit the people getting them. Give those industry folks a couple of glasses of their own product and they will readily admit it.

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