The massive tax overhaul passed last week by a Republican Congress benefits the usual suspects: corporations, private schools and multimillionaires.

Joining them in the winners' circle? Oregon's favorite industry, craft beer.

The GOP tax bill contains a $4.2 billion tax break for the nation's small brewers. The bill slashes the excise tax in half—from $7 a barrel to $3.50—for the first 60,000 barrels of beer brewed by companies that produce less than 2 million barrels a year.

At last count, Oregon has about 230 such craft breweries—each of which stands to save as much as $210,000 in taxes between 2018 and 2019.

In left-leaning, beer-guzzling Portland, the tax cut places craft brewers in an awkward position, as if they discovered a Super Nintendo Classic under their Christmas tree while other Oregonians received socks.

"I don't think anyone's going to thumb their nose at it," says Ben Edmunds, brewmaster at Portland's Breakside Brewery. "Maybe you can find a more fiery brewer who wants to give his taxes back to the government."

Unlikely. Lowering the excise tax on craft brewers has been an industry goal for years.

Portland’s Breakside Brewing will save $90,000 next year thanks to the congressional tax bill, estimates brewmaster Ben Edmunds. (Nashco)
Portland’s Breakside Brewing will save $90,000 next year thanks to the congressional tax bill, estimates brewmaster Ben Edmunds. (Nashco)

Art Larrance, owner of Cascade Brewing in Beaverton and co-founder of the Oregon Small Brewers Coalition, a lobbying group for craft brewers, praises the tax cuts overseen by President Donald Trump.

"The Brewers Association and the other beer advocates' groups have worked for at least five years attempting to pass this legislation," Larrance tells WW, "but it has taken President Trump to recognize the importance of small business to Americans. This administration chose to expedite this much talked-about boost to those taking a risk to achieve their dream."

Cascade Brewing (Matt Wong)
Cascade Brewing (Matt Wong)

Oregon brewers already enjoy the lowest state taxes in the country—$2.60 per barrel. Chuck Sheketoff, executive director of the Oregon Center for Public Policy, has long been critical of Oregon lawmakers' refusal to raise that tax.

He says the federal tax cut is unnecessary and bad policy—and notes that the craft brewing industry is already booming.

"There's been no shortage of new breweries opening in Oregon or around the country," Sheketoff says. "This is nothing more than a Christmas gift from Congress to an industry that doesn't need it and that comes at the expense of public services."

The brewers' tax break was championed by U.S. Sen. Rob Portman (R-Ohio), who shepherded it through both chambers of Congress. But Oregon's senior Democratic senator, Ron Wyden, sponsored similar legislation earlier in 2017.

His office scoffs at the idea, floated this month by the Los Angeles Times, that Republicans hoped to win Wyden's vote by including the craft-beer language.

"He was never tempted to vote for this bill," says Wyden spokesman Hank Stern. "Sen. Wyden was and is proud to lead the fight against a bill that showers corporations with goodies and raises taxes on over half of the middle class."

(Breakside, Nashco)
(Breakside, Nashco)

Don't expect to see the savings in your glass. (It wouldn't amount to much of a discount anyway—pennies a pint.) Edmunds and Larrance say most brewers will spend their windfall on new employees and tanks.

"If you are a brewer of 3,000 barrels a year," says Larrance, "it's $10,000, and that can buy a tank for expansion."

At Breakside, Edmunds says brewers will grin and bear the fate of being lumped in with beneficiaries of a politically unpopular plan.

"I think that anyone who knows how tax bills get made knows that you're not going to pass this unless it's part of a big package, no matter how bipartisan the support is for it," he says. "It'd be Pollyanna-ish to think this bill could have made it through Congress as a stand-alone piece of legislation."

Cascade Brewing (Bridget Baker)
Cascade Brewing (Bridget Baker)

Cheers!

Small brewers currently pay $7 in federal excise taxes on each of barrel of beer
they produce.

Under the new tax laws, those brewers will pay $3.50 in federal excise taxes on each of their first 60,000 barrels.

For a brewery that produces, say, 40,000 barrels a year, that's a $140,000 tax cut.