Erik Paulsen’s “Brew”haha … No Laughing Matter If You’re Concerned About the National Debt

You can almost set your clock by it … when Minnesota’s Third District Congressman runs out of elementary schools and medical facilities to visit, he stops at a Craft Brewer … even if the brewer is not in his district (as pointed out by commentators in this tweet).

Makes ya think of this story :

A man walks into a bar …
It’s a busy bar but the bartender sees him motioning and asks “What’s your pleasure ?”
The man replies “My pleasure is to get you a tax cut and let you grow your business.”
The bartender looks a little skeptical and responds “how is a tax cut going to help my business ?”
“Simple”, the man says “If the excise tax on alcohol is reduced, the lower prices will encourage more people to buy the products … and you will have more customers.”
The bartender responds, “Sounds good but it’s only couple pennies a bottle … even if the tax were eliminated, why should I cut the price … but go ahead and do it if you want to, but I’m keeping the savings.”

Obviously, the man is a Member of Congress … ‘cause that’s what they do … tell people that all will be right with the world if only taxes were cut … too bad the bartender did not realize that the brewer was not going to pass any tax savings on to him.

Patron gets zippo … barkeep gets zilch … government gets less revenue … but the business owner makes a more.
Welcome to Republicans in control !

That story was from a June 14, 2015 MN Political Roundtable commentary when Erik Paulsen was pushing his desire to reform the excise tax on beer.

Actually, this is not a new issue for Congressman Paulsen as he has pushed it since he was an original sponsor of H.R.494 – Small BREW Act on February 5, 2013. That bill garnered 182 sponsors … but the House took no action.

Last term, Congressman Paulsen introduced H.R.2903 – Craft Beverage Modernization and Tax Reform Act of 2015 – on June 25, 2015 … and it garnered 289 sponsors … but the House took no action.

TIME OUT … if there are 218 votes need to pass legislation in the House, and 289 sponsors, WHY didn’t Congressman Paulsen demand a vote ?

Fast forward to the current bill — H.R. 747 Craft Beverage Modernization and Tax Reform Act of 2017 — surely, this must be on the voting schedule ? “It is always tough to move tax policy,” Congressman Paulsen has said, but “the prospects are pretty good.”

OK … maybe the business owner can wait a little for his tax cuts … but isn’t there more that could be done with reform … how about JOBS … as Congressman Paulsen tweeted in 2015

And retweeted praise that he received this year

Gosh … from 34,760 to “almost” 43,000 … maybe there doesn’t need to be a tax cut to save the industry … but let’s remember that there are elections and what could better than MORE JOBS and so many Members of Congress wanting to cut taxes ?

Well, it should be difficult if you are a “MathGuy” who profess such disdain for America’s National Debt.

First, let’s look at the JOBS number … is the “almost 43,000” figure correct ?
Yes … it is … well actually the 2014 data from John Dunham and Associates puts the number at 42,912. But that number includes the retail and marketing employees … the number of people working at breweries is only 667. Heck, in 2014, Wal*Mart had 21,877 employees in Minnesota … and none of them brew beer or make any product.
Thus as stated about the bartender, a tax cut for selected brewers won’t change the paycheck of the bartender, but it will change the balance sheet for the owner of the brewery.

Let us remember what the tax is … it is an Excise Tax … paid based on the production of the product … and in essence buried into the selling price of the product … passed along to the consumer. It’s not a tax on profits … it’s a consumption tax.
Ya gotta wonder if the brewers got a reduction in their excise tax, would they really invest in making the “next great beer” … or just keep it in profits.
After all, the current tax which is passed onto consumers has not seemed to hamper business … in fact, since Congressman Paulsen has started his Excise Beer Tax Reform movement … the industry has grown. From 2013 to 2014, the Brewers Association reports a 13.4 percent increase in regional craft breweries, a 27.8 percent increase in microbreweries, and a 10.3 percent increase in brewpubs. With all 12 months of 2016 data now available, beer production grew by an estimated 300,000 barrels in 2016. That’s product … not price.

But the MathGuy knows that “reforming” the tax by enacting a lower rate for some producers means the loss of some revenue. (The current rate for small brewers is $7.00 per barrel for the first 60,000 barrels which Congressman Paulsen proposes to cut in half.)

Congressman Paulsen has not stated an offset for that loss revenue … nor has he announced a CBO report, but as reported in 2015 … the proposed excise tax reduction would directly reduce the excise tax revenue collected by the federal government by $78.8 million.

So WHY would you advocate reforming a tax that consumers don’t realize they are paying … will not appreciably impact job creation … and without an offset, will add to the National Debt ?

Well, look up the term “Free Beer” in the Urban Dictionary

A myth older than the bible. There are many different versions depending on the country or area of the world but Free Beer has always been and continues to be a method of attracting people to lame events and or boring parties. It continues to be a tease because if anyone really did experience real true free beer in its purest form, chances are they got too drunk to remember it anyways.

Congressman goes to small brewers to tell them how hard he is working for them … it’s a tease … he just wants their votes on Election Day.

Now, if the MathGuy was truly concerned about the National Debt, he would consider the CBO report to standardize the base on which the federal excise tax is levied by using the proof gallon as the measure for all alcoholic beverages. Currently, beer is taxed different than wine or distilled spirits.
The CBO report suggests such a change could reduce the National Debt by $70 Billion over ten years.

Let us remember that the Beer Excise Tax has not been changed since the Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L.101-508) … when it was done to reduce rising budget deficits … so how can a MathGuy profess such anger at the rising National Debt and not consider this CBO report … instead, Congressman Paulsen is more concerned about getting votes by awarding another tax cut to a special interest.

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