Unfortunately, I wasn't able to attend the hearing on Tuesday. But I asked Chris Staples of Furthermore Beer for his thoughts and he was more than happy to provide some notes. He makes some excellent points and I can only say that I'm disappointed by the extremes and ignorance displayed by both sides of the debate.
While these extremes make for incendiary sound-bites, they add nothing to constructive negotiation and only foster ill-will from the other side and in the public. I expect it from the lobbying groups (health care and the tavern league), I am sorely disappointed to see it in our elected officials.
With that said, Chris Staples:
Chris Staples here. I own a small brewing company in Spring Green, Wisconsin called Furthermore Beer. I used to work for Information for Public Affairs in Sacramento, California where I dealt with legislation from all fifty states and the Federal government on a daily basis. My father was killed in a car accident that was not related to alcohol. My father-in-law (son of the former Chair of the UW-Madison Political Science Department and now deceased) was responsible for killing someone in a drunk-driving accident for which he spent significant time in prison. My wife and her siblings live with the fallout of that destruction every day. I was also at the hearing on Assembly Bill 287 ("The Beer Tax") from 10 am until 2:15 pm. I am still working on sorting through everything I heard and saw, and am will try to put a finer point on my observations, concerns and criticisms in the coming days. But here are a few of my initial reactions:
* I believe the author of the bill is well-intentioned, despite being hard to like: being willfully ignorant or grossly uninformed as regards the three-tier nature of the brewing industry and being very dismissive and smug about how Bill 287 would affect not only our State's brewers, but the economy as a whole is no way to achieve reasonable debate, partnership and cooperation in addressing social ills.
* From the outside looking in, the two most persuasive sound-byte arguments for increasing the tax is that 1) it's only 2.5 cents per bottle of beer, and that 2) the beer tax hasn't been raised for 40 years. As regards the former argument, the Bill's author, Rep. Berceau and her allies seem content to hold on to this notion that it's only going to cost the drinker 2.5 cents, and that consumers shouldn't complain because it affects people based on how much the drink (ergo we tax "problem drinkers" disproportionately), and that industry will simply be able to pass the tax on with no ill effects (or grossly exaggerated negative impact at worst). What was incredibly insulting to me was the lack of willingness or worse, lack of understanding, that the supporters of AB287 showed by adhering to these notions. A tax at the production level gets inflated at the distribution level by 30% and gets again inflated at the point-of-sale by about 30% (depending on the particular retailer or bar.) The suggestion seemed to be that we, as brewers, could somehow bypass the MANDATED three-tier system to make sure this tax doesn't get inflated. Supporters also fail to acknowledge that as craft brewers, we know that our sales will decrease as the price of our product goes up. And yet, our fixed-costs don't change. Therefore, we have to raise the price further. It's unavoidable if we wish to stay in business. So the consumer, whether a light, moderate or heavy drinker, will be paying much more than 2.5 cents per bottle. On top of which, it is my political instinct that a) the author of the bill WANTS THE TAX TO BE INFLATED, despite insisting it is only a 2.5 cent tax increase per bottle and that b) the author knows it would be political suicide to do the thing that would actually achieve the result she seeks, which is to tax all alcohol (not just beer, and not just WIsconsin producers) at the at the point of purchase/consumption and not make this an issue about whether breweries are paying their fair share. Which leads me to the latter argument. Yes, it is true that the beer tax has not been increased for forty years. A fair enough point. But what no one has said is that that fact is a failure of past Legislatures, not of contemporary brewers! If today's legislature suggested raising the beer tax $1 per barrel, it may not provide Rep. Burceau for all the money she seeks for treatment and law-enforcement programming but it would be hard for industry to argue against. Instead, today's Legislature will have the opportunity to enact a tax on the brewing industry that seeks, in one fell swoop, to compensate for a FAILURE OF THE LEGISLATURE FOR THE LAST FORTY YEARS by crippling my business at a time when our industry is already struggling. Rep. Ott asked "where is the money going to come from?" Well, I know one thing for certain: it can't come from me if I'm out of business as a result of a beyond-the-pale tax increase the extent of which I could not have foreseen when I wrote my business plan in 2004. In other words, I am happy to help contribute my fair share. By I can't contribute enough to compensate for the lack of an appropriate and sane tax predating my business by 36 years. And to those who spoke about how unfair it is to have to pay for services we don't use through taxation, I say "get a grip": we all do it all the time. People without kids pay property taxes which benefit the schools. People whose homes aren't on fire or aren't the victims of a crime pay for fire and police services. People who don't drive much pay for roads. People of means pay for social programs that help people without means eat, clothe themselves and their children, provide shelter for a variety of reasons, cover health care costs, etc. Such is the nature of our democracy. And before scapegoating the brewing industry as being irresponsible and not paying its fair share relative to other states, please acknowledge the levels of taxation on our industry relative to other industries and our state compared to other states. As an industry, we pay an astonishing amount in the form of taxes and would appreciate it today's Legislature would consider that fact as opposed to being insultingly dismissive of our concerns.
* Those in attendance heard devastating testimony from Wendy Calvillo, whose twelve year-old son and husband were killed in a head-on collision near Fort Atkinson in February of this year. I don't think anyone in that room will ever forget what we heard. My deepest sympathies go out to Mrs. Calvillo and her surviving children. As the father of two and as a person who's own father was killed in a non-alcohol-related automobile accident, all I can think to say about the injustice she and her family have suffered is horrible, senseless, violent and criminal. And yet, I was left with a competing feeling which I'm reluctant to even voice given the magnitude Mrs. Calvillo's loss: she is seeking emotional solace in the form of a punitive measure on a responsible and heavily-burdened industry which, given the legislative analysis available for Bill 287, has dubious capacity to effect the change it seeks given the vague allocation guidelines and the lack of protection for the funds raised. And I'm very sad to say that I don't imagine that raising the beer tax is going to decrease Mrs. Cavillo's pain. I think that the logical extension of her reasoning and experience is that there is absolutely no acceptable circumstance or condition by which someone loses their loved one in a drunk-driving "accident". And while no reasonable person would disagree with this assessment, the only way to ATTEMPT to achieve this is with total prohibition of alcohol. And we know that even then, people with the desire and/or need will find/make it/consume it anyway. There is a certain risk to individuals and society to permitting any number of products and behaviors: guns, jet-skiing, fast food, alcohol, cell phones, automobiles, unpasteurized cheese. And yet, as individuals and a society, we routinely accept these risks and call it the price of choice and liberty. With all due respect to the Calvillo family and with a heart that cries out in sympathetic agony for their loss, I don't accept that it is suitable to beat-up on the beer industry given the great unlikelihood of prohibition.
* "Smartest Dude in the Room" award goes to Michael M. Miller M.D., President of the American Society of Addiction Medicine and the Medical Director of NewStart Treatment Program based at Meriter Hospital in Madison. He did a great job of cutting through the b.s., identifying the problem, suggesting that the status quo isn't working, offering that Assembly Bill 287 is better than nothing, but also noting that beer, wine and liquor aren't the problem: that alcohol is the problem, and that a tax on alcohol makes more sense than a tax on beer. If anyone in that room was going to win fence-sitters over to the affirmative side of the debate, it was Dr. Miller. My only qualm was his characterization that we grow our businesses by growing our audience, and that the way we all do that is by making our product attractive to children. I think this carryover argument from the cigarette debate doesn't apply to our industry, particularly the craft-end of the industry where neither price nor flavor profiles make the product conducive to consumption by children. Nor do smaller producers possess the resources to reach-out to a younger audience via advertising and marketing. That disagreement aside, I think everyone involved in this debate could learn from Dr. Miller, and I believe he had the best grip on the root issue and would be a great partner both for the industry and for the pro-tax folks. I would personally be willing to help Dr. Miller in any way within my means.
* "Rabid Dog" awards go to the woman from Colorado who has been involved with providing some manner of treatment services for six years and who told the Committee she was there for "informational purposes" (if you wish to speak before the committee, you have to declare whether you are there to speak for the issue, against the issue or are there for informational purposes) and proceeded to go on a five-minute ill-informed industry-bashing tirade. Whatever. Equally asinine was the Tavern League of Wisconsin who proceeded to go on a five-minute embarrassingly ill-supported legislation-bashing tirade that amounted to: "our members can't take any more taxes!" Well that may be true, but why? In both cases, raising one's voice does not add clarity to the debate.
* "Biggest Disappointment" award goes to my own Representative, Steve Hilgenberg, District 51. He gave the least passionate, least detailed and least engaging address to the Committee. "You know, it's time. And people want it." Ug.
* Also notable were three of the Committee members: Reps Bies, Ott and the gentlemen sitting second from the right (as facing the Committee) seated nest to Rep. Berceau. Rep. Bies quite surprised me, perhaps more because of my own assumptions and prejudices: I am a life-long Democrat with a deep anti-authoritarian streak. Rep Bies is a retired law enforcement officer and a Republican. And to be truthful, he was the only member of the Committee who made any damn sense at all. He spoke well. He asked pointed questions. And he seemed to actually follow the debate with an eye toward advancing to a conclusion. I really appreciated his presence on the Committee and his repeated questioning of speakers regarding the efficacy of treatment and the protection/earmarking of the proposed additional funds. Rep. Ott, on the other hand, seemed quite content to admonish and lecture both speakers and audience. I found him to be patronizing and annoying while offering little of merit to consideration of the question. And the third Representative (whose name placard I could not read. Apologies.) seemed constitutionally incapable of understanding the three-tier system, and why, if a tax was applied at the production level, it would increase as it went up the supply chain such that the politically defensible 2.5 cents per bottle became much more at the cash register or bar rail. I literally bounced my head off the table when for the fourth time he became exasperated and asked for clarification on this issue. For goodness sake: do your homework!
Anyone who has read this far probably stands in opposition to this Bill. But on the off chance you are a supporter of AB287 and are still reading, please consider that this proposal has dubious merit: the funds will be poorly protected and questionably allocated, and while the status quo may not be acceptable, there is more than one way to go about change. This Bill truly will hurt an important industry which is already contributes disproportionately and operates on razor-thin margins. In any case, these are my impressions, based on my time at the hearing. Take them as you will, and please know they are offered in good faith and as an attempt to enliven debate surrounding this important issue, not stiffle it. Feel free to pass this along.
Sincerely,
Chris Staples
