Beer Stimulus: Can Hops and Barley Create Jobs?

June 22, 2010— -- Crack a cold one and help save the economy?

That's what an unlikely pair of political allies believe could be the brew with a bill in Congress that would reduce taxes for small breweries and, they say, create new jobs.

Reps. Richard Neal, D-Mass., and Kevin Brady, R-Texas, are proposing a bipartisan bill that craft brewers have dubbed the "beer stimulus." It would reduce excise taxes for breweries producing less than 6 million barrels a year, in the hope that small-town brewers could fatten their balance sheets and hire more workers.

One of brewers' bigger expenses is excise tax imposed on spirits and tobacco, first imposed in the 18th century to pay off debt from the Revolutionary War. Excise tax on beer, like other spirits, is paid per barrel produced and can be quite costly to smaller producers. The proposed legislation would drop the tax from $7 to $3.50 per barrel on the first 60,000 barrels for small brewers.

Rob Tod, owner of Allagash Brewery in Portland, Maine, said excise tax is one of his biggest financial outlays.

"Just to give you an idea of the burden we have in paying excise taxes: We employee 25 people ... and this year we'll pay over $150,000 in excise taxes," Tod said. "Whether we make or lose money we have to pay these excise taxes, and it's a burden that other small businesses don't have."

According to an estimate in a Harvard University study, reducing the excise tax would create more than 2,700 new jobs in the first year to 18 months and an average of 375 new jobs per year over the following four years.

Brady, the co-author of the bill, said although it isn't a priority for Congress to do, it is a serious bill that could create a lot of jobs.

"I know, considering we are fighting a war, the economy and the oil spill, this isn't the top of Congress' agenda, but this is a chance to increase jobs," Brady said. "Beer has gone global. We have these small craft brewers that can bring amazing new tastes in the market."