A Craft Beer Tax Battle Is Brewing On Capitol Hill : The Salt Craft beer is a rapidly growing industry, and Washington lawmakers have noticed. Two proposed bills would lower the federal excise tax for small brewers.

A Craft Beer Tax Battle Is Brewing On Capitol Hill

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Craft beer is a growing industry that's getting a lot of attention these days from Washington lawmakers. There's a battle on Capitol Hill over how to tax it, as NPR's Juana Summers reports.

JUANA SUMMERS, BYLINE: Congressman Patrick McHenry is a man who knows his beer. The refrigerator in his Capitol Hill office is filled to the brim with it.

CONGRESSMAN PATRICK MCHENRY: So here are your choices. We have Asheville choices here.

SUMMERS: All right.

The Republican's district includes Asheville, N. C., which claims it has more breweries per capita than any other U.S. city.

MCHENRY: Breweries in my district are not only about sort of the art of brewing, they're jobs. So these are small business folks that are risk takers that are trying to take their art and make a living doing it. It's a pretty cool thing. So cheers.


MCHENRY: It's a good sound, huh?

SUMMERS: Small beer is big business, not just in McHenry's district, but around the country. There's even a caucus for craft beer in the House and Senate. And the members have been busy. McHenry thinks taxes should be lower on craft beers, and he's cosponsored a bill.

MCHENRY: It's simply for the smallest brewers in the country and actually cutting in half their excise tax for the first 60,000 barrels. And then a lower rate until they reach 2 million barrels.

SUMMERS: To understand why all this matters, you need to know a little bit more about how tough the beer business is. And where better to learn that than a brewery? Right Proper Brewing Company is just two miles away from Capitol Hill.

THOR CHESTON: This is a brew pub, which is a combination of brewery and restaurant.

SUMMERS: Thor Cheston has been brewing beer in D.C. for a little more than a year.

CHESTON: This is our brewing team. They're all here.

SUMMERS: Last year, Right Proper made 1,000 barrels of beer. Under current law, for each barrel, $7 went back to Uncle Sam. Do the math - Right Proper paid $7,000.

CHESTON: Our margins are so tight that we're not counting dollars; we're counting nickels and dimes.

SUMMERS: Cheston clearly feels he could use some relief. And in Congress right now, there isn't just one beer bill that would help him out; there's two. The one McHenry was talking about is called the Small BREW Act, and the other is called the Fair BEER Act. Boil it down, the first bill provides tax relief just for small brewers. The second provides tax relief for all brewers. You could say this is about big beer versus small beer. You could say that, but...

JIM MCGREEVY: I don't see this as a big beer versus small beer discussion.

SUMMERS: That's Jim McGreevy. He heads up the Beer Institute.

MCGREEVY: I see this as a way of reforming attacks that's invisible to consumers that potentially hinders new brewers from getting into the marketplace. That's what we should focus on, I think.

SUMMERS: McGreevy's group represents beer giants like Anheuser-Busch InBev and MillerCoors. He says the Fair BEER Act is exactly that - fair- and that if it becomes law, it'll help beer drinkers, too.

MCGREEVY: We see the potential of tax reform for beer, for the beer excise tax, as a way of creating jobs, as a way of established brewers reinvesting in their businesses. So that inures to the benefit of the consumer.

SUMMERS: Which brings us back to the brewery.

CHESTON: OK, so this is our bright tank room. This is where our finished beer goes.

SUMMERS: Thor Cheston says the Fair BEER Act isn't so fair and says it won't level the playing field. He compared the way things are now to a documentary he once saw about bull riders.

CHESTON: One of the bull riders said, well, we're not competing against each other. We're all competing against the bull. So the small craft brewers are not competing against each other. We're competing against Anheuser-Busch and MillerCoors. They're the bull.

SUMMERS: Whether or not all brewers are in it together, don't expect results anytime soon. Members of the Small Brewers Caucus will keep enjoying craft beers, but drinking beer is a lot easier than making laws. Juana Summers, NPR News, Washington.

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