March 17, 2010
Congressman Earl Pomeroy
Room 328, Federal Building
220 East Rosser Avenue
Bismarck, ND 58501
Dear Congressman Pomeroy,
I greatly appreciate the opportunity to discuss co-sponsorship of H.R. 4278, a bipartisan bill introduced by Representatives Neal and Brady to create a graduated beer excise tax rate of $3.50 and $16 for America's small brewers, with Congressman Pomeroy.
Small brewers are Main Street businesses with a successful record in creating manufacturing and hospitality jobs. Nationally, small brewers employ nearly 100,000 full- and part-time employees and generate more than $3 billion in wages and benefits and pay more than $2.3 billion in business, personal and consumption taxes. Small brewers are vital small businesses in communities across the country, typically employing 10 to 50 employees. I know of two new local business opening in Bismarck within the next year.
Consumer demand for the bold and innovative beers brewed by America's small brewers has grown significantly in recent years. But beer produced by small, independent brewers still represents only 5% of the beer sold nationwide. As small businesses, we face many economic challenges. Because of differences in economies of scale, small brewers have higher costs for production, raw materials, packaging and market entry than our much larger competitors. Furthermore, efforts to increase state taxes for all brewers continue to threaten jobs and cloud the prospects for our business future.
The small brewers excise tax rate enacted by Congress in 1976 has helped to nurture the development and growth of the craft beer industry in America. The beer industry in America has changed considerably since 1976, however. The annual production of America's largest brewery has risen from about 45 million barrels to around 107 million barrels. The number of large brewers in America has decreased significantly. Today, the two top players in the U.S. beer market are global companies that account for more than 90% of domestic beer production. In light of these significant changes, we believe that it is important for Congress to update the small brewers tax rate so that it can continue to support a diverse and competitive marketplace.
To that end, I strongly encourage you to join as a co-sponsor of H.R. 4278. For small brewers that produce less than 6 million barrels of beer, the bill provides two benefits:
First, it would reduce the excise tax rate applicable to the first 60,000 barrels of beer from $7.00 per barrel to $3.50 per barrel.
Second, it would establish an excise tax rate of $16.00 per barrel on beer over 60,000 barrels but less than 2 million barrels.
Any barrel over 2 million (about 95% of U.S. beer production) would continue to be taxed at a rate of $18.00 per barrel.
According to an economic study conducted by John Friedman of Harvard University on behalf of the Brewers Association, H.R. 4278 would stimulate job creation quickly and at a low cost to the federal government.
Friedman's study estimates that the bill would:
· Generate more than 2,700 new jobs over the first twelve to eighteen months followed by an average of 375 new jobs per year over the next four years.
· Create new jobs costing less than $4,000 in foregone federal revenue in 2010 as compared with $92,000 in spending required to create one job under the American Recovery and Reinvestment Act of 2009.
I will follow-up with your office in the near future about H.R. 4278. If you have any questions in the meantime, please contact me at 701-425-8870 Thank you for your time and consideration.
Sincerely,
Michael J. Thomas
Kramer Agency
123 E Broadway, PO Box 1318, Bismarck ND 58502
Office: 701.255.4502 Fax: 701.239.0009
www.krameragency.comYour Partner For Life
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