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Excise Tax Trim Would Brew up New Jobs

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Small brewers across the country were buoyed by news that New York’s senior senator, Chuck Schumer, had eagerly embraced legislation that would reduce the small brewers’ excise tax to spur economic development and create jobs.

Last month, Schumer did news conference in several Upstate New York towns that are home to small breweries. He joined co-sponsors Democrat John Kerry of Massachusetts and Republican Mike Crapo of Idaho in supporting the bill, S534.

Schumer’s support spotlighted the fact that there are now 65 small breweries in New York State, and more than 1700 in the United States. Collectively, they employ more than 50,000 people nationwide. And the numbers are growing. The Brewers Association says there are another 400 breweries in the planning stages.

Simply put, the bill would reduce the excise tax from $7.00 per barrel to $3.50 per barrel on the first 60,000 barrels of production. Above that, the tax would go from $18 to $16 per barrel for breweries up to 6 million barrels. (A barrel is about 14 cases of beer.)

That would save my company about $310,000 a year. I can tell you that money would be plowed back into the $8 million expansion that we are currently completing in Brooklyn. So far, we have added 15 jobs, bringing us to 50 employees in Brooklyn. We expect to hire 15 more people in the next few years. We also brew upstate, in a facility that employs 120 people.

The cost of the bill would be $47 million in the first year, and it would create an estimated 2700 jobs the first year and 375 jobs in each of the next four years. According to Dr John Friedman of Harvard University, the cost of creating these jobs would be $4000 annually, a fraction of the $90,000 per job in the stimulus package passed by the last Congress.

Like many other breweries around the country, Brooklyn Brewery does its best to be a good corporate citizen, donating beer and cash to local not-for-profits and helping arts and cultural organizations with their fundraising. In the forward to my book, BEER SCHOOL, Mayor Michael Bloomberg credited the brewery with contributing significantly to the renaissance in Brooklyn.

Senator Schumer noted the positive impact of local breweries and also noted their labor intensive practices also contributed significantly to job creation. America’s small breweries produce about 5 percent of the beer consumed in the country, but they employ half the people directly employed in the brewing industry in the United States.

There has been some grumbling among some small brewers that the bill supports some of the larger small brewers than the smallest. And it seems possible that the ceiling of 6 million barrels will be reduced. But at the Craft Brewers Conference in San Francisco this past week, the vast majority of members of the Brewers Association gave a thumbs-up to the Small Brewers Tax Relief Act.

This is the second year the small brewers have pushed the bill. The most surprising result has been the bi-partisan support it has garnered. There are not many things that Schumer and Rep. Eric Cantor, the Virginia Republican, agree on. But S534 is one of them.

Steve Hindy is co-founder of Brooklyn Brewery