QUERY : What does Erik Paulsen like more … beer or unfunded tax cuts ?
Well, may be the answer is a combo … yep, the “Math Guy” who professes “The bottom line is we need a tax code that is more simpler, that is more fairer, that gets rid of the special carve-outs, the special lobbyist loopholes. That’s the direction we need to go.” seems to have found a fondness for beer. Not just any beer but
— Rep. Erik Paulsen (@RepErikPaulsen) May 22, 2015
— Rep. Erik Paulsen (@RepErikPaulsen) May 4, 2015
— Rep. Erik Paulsen (@RepErikPaulsen) April 7, 2015
National Beer Day! Celebrate w/ your favorite MN Beer. MN breweries & beer wholesalers contributed to 34,760 jobs pic.twitter.com/lFWsHCIuus
— Erik Paulsen (@Erik_Paulsen) April 7, 2015
— Erik Paulsen (@Erik_Paulsen) September 27, 2014
Yeah, Erik Paulsen talks about beer … and cutting the excise tax for “small” breweries … and has been talking about it for a long time, as noted in this Roundtable commentary from October 20, 2013
Paulsen Returns to MN Looking For Another Business Excise Tax to Cut
— Erik Paulsen (@Erik_Paulsen) October 18, 2013
The industry estimates the tax break would cost the federal government $67 million a year … and consumers have no guarantee that any of that lower excise tax will result in lower prices. And who will this benefit … you may think the small “craft” brewers … yet that depends upon your definition of “small”, as Samuel Adams, which produces 2.7 million barrels, is lobbying that the 2 million barrels a year should be changed to 6 million barrels. If so, that break would cost Americans another $4.75 million a year in lost taxes from the Boston Beer Co. alone.
“Representative” Paulsen’s 2013 goal is still being pushed in 2015 … except now the proposed excise tax reduction would directly reduce the excise tax revenue collected by the federal government by $78.8 million in 2015.
Clearly the breweries are doing fine … let us remember that this is an excise tax … in fact the Federal excise taxes on alcohol was first imposed by the Distilled Spirits Tax Act of 1791. In essence, it is a “user tax”. When a brewery sells a beer to a wholesaler, it prices its product based on the total cost of the beer, including the taxes to cover costs, and to make a profit.
In Minnesota the number of “craft” breweries in 2013 was 52 and by the end of 2014, there were 73.
Nationally, there were more than 3,400 breweries were in operation across the United States in 2014, representing a 19 percent increase in the number of breweries in the U.S. from the previous year. That number includes more than 600 new breweries that opened for business across the country in 2014. The data suggested that craft brewers produced more than 22 million barrels of beer last year, constituting 18 percent growth for the segment.
All this growth … despite the fact that the Small BREW Act of 2013 was not enacted !
Let’s look at “Representative” Paulsen’s efforts through three lens … political, economic and philosophy.
The politics is obvious … who wouldn’t want a tax cut … thus, the reason why there are 45 Democrats and 27 Republicans currently listed as co-sponsors of H.R. 232 : The Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act),
Heck, there is even a House Small Brewers Caucus with 147 Members including John Kline, Betty McCollum, Rick Nolan, and of course, Erik Paulsen.
Politicians can easily find potential voters that will be receptive to a perceived tax cut.
Politicians can also easily find campaign cash … the National Beer Wholesale Association donated $3,223,700 for the 2014 campaigns including $ 67,500 going to the Minnesota delegation ( Erik Paulsen, John Kline, Rick Nolan, Collin Peterson and Tim Walz each received $10,000 while Betty McCollum only got $5,000.)
The economics is the problem.
The House has never held a hearing on the Small BREW Act … despite the pronouncements from “Representative” Paulsen of the need to enact this tax cut, the Ways and Means Committee, which he sits, has failed to act.
As the “Math Guy” reminds voters, America has a national debt problem … so it may be easy to promote a tax cut over a friendly beer, it’s another thing to reduce the revenue that that tax brings in.
And for the consumer, a tax cut for the brewer does not mean that would be passed along when the product is sold. The tax cut probably represents about 25 cents on a case of beer … so, no one would notice whether it was not applied to the selling price … instead it goes into the business owner’s pocket.
Plus, as HuffingtonPost points out, the cost of the excise tax on beer is small.
The philosophy is the interesting question for Erik Paulsen. Erik Paulsen says that he wants to “get rid of the special carve-outs, the special lobbyist loopholes” yet what he is proposing is another tier to the tax … in response to lobbyists’ requests.
The Small BREW Act seeks to reduce the small brewer federal excise tax rate on the first 60,000 barrels by 50 percent (from $7.00 – a rate that was established in 1976 – to $3.50/barrel) and institute a new rate of $16.00 per barrel on beer production above 60,000 barrels up to 2 million barrels (previously that would have been $18 per barrel). Breweries with an annual production of 6 million barrels or less would qualify for these tax rates.
Does that sound like a “carve-out” ?
An expansion of the complexity of the tax code ?
Philosophically and economically, Erik Paulsen should not be pushing this … but the opportunity politics outweigh those concerns.
Yep, as the Roundtable asked before the 2014 elections Will Sex-trafficking Save the GOP, the 2016 elections might ask the question :
Will Beer Drinkers Embrace the GOP (even though Democrats are pushing the same issue) ?
Here’s the message for Erik Paulsen … the next tweet should be when the House has passed a deficit-neutral Small BREW Act … until then, your actions are pure political pandering.