EUGENE, Ore. - After the reddish-hued liquid filled the pint glass and the bubbles formed a frothy head, Jeff Althouse held up an example of the kind of product his company would like to export from Eugene to Washington, California and beyond.
"It's called Organic Subtext," said the former math teacher. "Pacific Northwest red ale."
Althouse and his brother started Oakshire Brewing as Willamette Brewing in 2006. Oakshire beers are now in stores and on tap around Oregon. The brewer, with 11 employees, is on track to produce 3,600 barrels of beer this year.
"We're one of the smaller ones," Althouse said. "Nonetheless, the impact for us would be huge."
Under existing laws, small craft brewers pay a federal excise tax of $7 per barrel on the first 60,000 barrels of beer brewed. The "beer stimulus bill" would cut that in half to $3.50 per barrel.
You don't have to be a former math teacher to figure out the impact on Oakshire Brewing.
"Since we don't finance any of our business with large bank loans, we need cash flow to help us grow our business," Althouse said. "So an additional $12,000 a year helps us do that.
Would those dollars translate into job creation in the beer sector?
"Our plan involves increasing our work force," Althouse said. "The faster we can move forward on that, the faster we can hire more people."
A spokesman for Oregon Sen. Ron Wyden, one of the bi-partisan co-sponsors of the bill, said if the 77 craft brewers around the state can expand their production and sales, so can everyone in the region's beer industry, from hop growers to beer distributors.
Oregon brewers currently employee 4,700 people in Oregon and generate an estimate $2.33 billion in economic activity each year, Wyden's office said.
Original press release from Sen. John Kerry, the author of the legislation:
Senator John Kerry introduced legislation today (May 12) to reduce the beer excise tax for America’s small brewers. This legislation, S. 3339, will help create jobs at more than 1,500 small breweries, which employ nearly 100,000 people in communities throughout the country, generating more than $3 billion in wages and benefits and pay more than $2.3 billion in business, personal and consumption taxes. Massachusetts is home to more than forty small breweries, including Sam Adams, the country’s largest small brewery, brewing over one million barrels of Boston Beer products.
The original cosponsors of the bill are Senators Mike Crapo (R-ID), Olympia Snowe (R-ME) and Ron Wyden (D-OR).
“Massachusetts started the small craft beer revolution, and we’re proud of it. It’s not all that long ago that pioneers like Jim Koch only dreamed of a day when people in Massachusetts would reach for a cold Sam’s Summer, a Wachusett IPA, a Harpoon UFO, or a Fenway American Pale Ale at Boston Beer Works. Many of Massachusetts’ small breweries have thrived despite being outgunned by huge multi-national beer companies, but in this competitive environment many more face daunting financial hurdles. Small and independent brewers are vital small businesses in our state, and relieving their tax burden will help them keep hiring and expanding,” said Senator Kerry.
As small businesses, small brewers face many economic challenges. Because of differences in economies of scale, small brewers have higher costs for production, raw materials, packaging and market entry than larger, well-established multi-national competitors.
The bill highlights:
- Currently, a small brewer that produces less than 2 million barrels of beer per year is eligible to pay $7.00 per barrel on the first 60,000 barrels produced each year. Reducing this rate to $3.50 per barrel would provide approximately $18.0 million per year to help strengthen our nation's smallest brewers and support their efforts to maintain and generate jobs.
- Once production exceeds 60,000 barrels, a small brewer must pay the same $18 per barrel excise tax rate that the largest brewer pays at over 100 million barrels. Lowering the tax rate to $16 per barrel on beer production above 60,000 barrels up to 2 million barrels would provide small brewers with an additional $26.2 million per year that would be used to support significant long-term investments and create jobs by growing their businesses on a regional or national scale.
- The small brewer tax rate was established in 1976 and has never been updated. Since then the annual production of America's largest brewery increased from about 45 million to 107 million barrels. The ceiling defining small breweries is 2 million barrels and the legislation would increase it to 6 million barrels.
Congressmen Richard Neal (D-MA) and Kevin Brady (R-TX) introduced the House version of the bill in December of last year.