Bipartisan Beer Caucus Hops into Debate over Tax Reform

A surprising cause might play a role in bipartisan tax reform later this year: beer. Members of both parties are expressing support for craft brewing, with a caucus even forming in the House to champion it.

The House Small Brewers Caucus has 225 members, more than half of the chamber, making it the largest bipartisan caucus on Capitol Hill. Beer might be the last truly bipartisan issue in Congress, according to caucus co-Chairman Peter DeFazio, as it has a major economic impact on almost every congressional district.

“It’s about jobs, jobs and more jobs,” Representative Mike Kelly, another caucus member, told The Hill. “There are some 32,000 people involved in independent brewing in Pennsylvania alone. You look at those numbers and you say, ‘Oh my gosh, this has a significant impact on local economies.’ ”

The caucus’s top priority is passing the Craft Beverage Modernization and Tax Reform Act, which would recalibrate the federal excise tax structure. Supporters argue that by lowering the excise tax, brewers can keep their costs lower and more competitive and “enable the craft beer industry’s continued growth,” as Representative Patrick McHenry, caucus vice chairman, said in a statement to The Hill.

Critics say expanding the bill reduces its benefit to small brewers and rewards the country’s largest producers.

DeFazio founded the Small Brewers Caucus in 2007, just as the craft beer industry exploded. In 2007, there were 1,460 craft breweries operating in the U.S. There are almost 5,500 now, according to the Brewers Association. Now, only 8 percent of congressional districts do not have a craft brewery within the district, according to DeFazio’s office.

In 2016, craft breweries produced 24,570,469 barrels of beer, of which 24,104,852 were sold in the U.S., the Brewers Association said.

In the Senate, Senator Ron Wyden recently streamlined the upper chamber’s version of the Craft Beverage Modernization and Tax Reform Act to completely overhaul the federal alcohol excise tax, a move that affects rules that apply to beer, wine, cider and spirits and also allies multiple industries, from alcohol to agriculture.

That streamlined bill has new life as part of the Republican majority’s push for tax reform. Wyden is the ranking member on the Senate Finance Committee as well as the co-chairman of the Senate Bipartisan Small Brewers Caucus.

Not everybody can agree on the elements of tax reform, but beer brings everybody to the table — literally, at times, according to Kelly’s office. Caucus members do sometimes quaff together at local D.C. breweries. Although they are reluctant to name favorite brews, DeFazio prefers an Oregon IPA and Kelly likes Erie Brewing’s Railbender Ale. Kelly added the caveat that “depending where I am, whatever they’re brewing, I’m drinking.”

The caucus has also weighed in with the Agriculture Department to push for continued hops research.

The agency said in February that they would “seriously consider” the request while deliberating future funding — and with the Defense Department on aluminum imports. Both issues are likely to have a tangible impact on the industry.



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