Craft brewers met with U.S. Rep. Jaime Herrera Beutler on Thursday to make their case for a bill that would cut their federal taxes and allow them to grow faster.
The Craft Beverage Modernization and Tax Reform Act, co-sponsored by Herrera Beutler, would reduce federal excise taxes brewers pay on their first 60,000 barrels a year. The tax would drop from $7 per 31-gallon barrel to $3.50.
Herrera Beutler, R-Camas, held a roundtable at Vancouver’s Ghost Runners Brewery with a handful of brewers to hear about taxes, which she said seemed to disproportionately impact small operators.
“It seems like a fairness issue,” she said. “You’re starting a business and growing it; it’s capital intensive, especially something like this. They’re taxed on a higher scale than those who produce more. So why not give them the ability to reinvest the money on the front end so they can grow and be big, and pay more in the end?”
That point was echoed by local brewers. Trimming federal taxes, they said, would save them thousands of dollars annually, which could then be invested into their businesses, creating jobs and raising wages.
Devon Bray, co-owner of Loowit Brewing Co., said his brewery has paid close to $10,000 in federal taxes this year.
“It could buy us another tank to increase production,” he said. “It could be more health benefits or a 401(k),” for employees.
Washington breweries also pay state excise taxes of $4.78 per barrel.
Among those in attendance Thursday were Bray and fellow co-owner Thomas Poffenroth, workers from Ghost Runners Brewery, and Bryan Shull, owner of Trap Door Brewing.
The breweries are all expecting rapid expansion in the next few years and expressed as much to Herrera Beutler. Loowit Brewing Co. hopes to grow from 11 employees to 20 as it opens a new kitchen, and Trap Door Brewing is scouting for a second location at the north end of the county.
Ghost Runners Brewery is growing from a six-person operation to 50. It will open a second location next summer at The Waterfront Vancouver. The new brewery and restaurant will be among the first attractions to open at the multiyear, $1.5 billion development.
Besides tax reform, brewers told Herrera Beutler about bureaucratic hurdles they face on a regular basis. Particularly, they criticized wait times and communication skills of federal agencies from which they have to get permits.
“Those are things government is known for,” she said. “Part of the reason I signed onto the bill they’re asking about would streamline that process and help on the taxation front.”
Herrera Beutler co-sponsored the bill in the U.S. House alongside Rep. Erik Paulsen, R-Minnesota, and Rep. Ron Kind, D-Wisconsin. Senators Ron Wyden, D-Oregon, and Roy Blunt, R-Missouri, sponsored a similar bill in the U.S. Senate.
The bill would also cut excise taxes for brewers producing more than 60,000 barrels per year.
According to the Brewers Association, the bill would simplify regulations. It would expand the list of ingredients that could be included in beer without approval from the Alcohol and Tobacco Tax and Trade Bureau; and allow small, unaffiliated breweries to transfer beer amongst each other for easier collaboration.
There are 355 breweries in Washington state, according to Annie McGrath, executive director of the Washington Brewers Guild. The nonprofit guild represents 160 of those breweries.
McGrath said the current rules need to be updated because breweries have grown so fast. One-third of the nonprofit’s membership was founded in the last three years, she said.
“Generally, our brewers are all in a critical growth phase right now,” she said. “To meet the demand we need some relief.”