Holy cow. There's trouble in paradise. Here's what happened. At about 3pm yesterday, outspoken brewer Larry Bell of Bell's Brewery rang BBD from the Cubs game to relay that it is his opinion that the small brewer tax bill (H.R. 1236 and S. 534), which sets a new tax threshold at 6 million barrels, should be scrapped in favor of language which keeps the threshold at 2 million barrels...If you're like me you read that and went "Holy Cow! I have no idea what any of that means or why it matters but it sounds incongruous and meaningful so I'm going to research it."
Like I said, "If you're like me ... and you have a beer blog ... and you find tax law interesting ... and you have a Thursday morning to kill ..."
Anyway. There's a bit of a backstory to this: At the end of last year the Brewers Association was faced with the problem that Sam Adams would no longer qualify under its [the BA's] definition of "craft beer" which put a barrel cap at 2 million barrels to be a member. So, rather than face the lost dues of its biggest member, the BA, unsurprisingly I suppose, simply raised the barrel cap to 6 million barrels, thereby retaining Sam Adams as its largest member by a rather healthy margin.
There. That ought to fix it, right?
Relatedly, and by relatedly I mean in a causative not a correlative, manner, Sam Adams faced another problem: the tax code gives a break to certain small brewers. The tax break goes like this: every brewery owes the federal government an excise tax of $18 per barrel; except, we don't want to hurt small breweries, and, in fact we want to encourage them, so instead of $18 per barrel, any brewery under 2 million barrels only has to pay $7 per barrel on the first 60,000 barrels.
You see where this is going right?
If you guessed that Sam Adams, through its puppet the Brewers Association, would lobby the government to increase the barrel limit from 2 million barrels to 6 million barrels you win a prize.
Given all of that, we come back to the Present Day. Larry Bell bitchin' in the Rags. Why does Larry Bell care? I'm sure if I had paid my $500+ per year for that damned subscription I could probably tell you. But, as it is, I have to guess.
My guess is that Larry Bell, like the rest of us, gets testy when he sees rules bent for "the special case." Even if the rules might ultimately (but probably not) affect/benefit him. It's the principle of the matter. Why should we treat Sam Adams any different?
It's a really good question, actually.
2 million barrels is a lot of beer. 6 million barrels is 3 times "a lot" (is that a "shit ton"?). Is it even possible to be a "craft" brewery at 2.5 million barrels of production? Given the scale of production is the $11 per barrel tax break on a mere 60,000 barrels (less than 3% of your production) incentivizing you at this point? Would an increase in $11 per barrel on less than 3% of your production really hurt you? And, if it's not providing an incentive or meaningful break, why should we (the American people) subsidize you? We need all the money we can get. Adding $660,000 isn't much, but, hey, it'll pay for a couple new school renovations.
In other words, if the Brewers Association weren't just a puppet of Sam Adams and listened to people like Larry Bell instead of Jim Koch, the Brewers Association might waste its lobbying dollars on increasing the 60,000 barrel part of that equation instead of the 2 million barrel part of that equation.