By Gregory B. Hladky
3:35 PM EDT, July 17, 2012
It sounds like a hell of a simple, good idea: cutting federal taxes on small breweries, thus helping out boutique producers of fine, foamy delights and maybe even getting them to hire more workers.
And our own U.S. Sen. Richard Blumenthal is all over this baby, visiting the popular Thomas Hooker Brewing Co. in Bloomfield earlier this month to publicize his support for the tax-slashing concept. Not bad for a dude who doesn't actually imbibe.
Except Blumenthal forgot to mention that this bill has been languishing in the U.S. House and Senate since March of last year, and that a similar proposal was offered way back in 2009 and has gone exactly nowhere in our do-nothing Congress despite clear and widespread bipartisan support.
"One of my frustrations here is that very sensible and important measures are gridlocked by some of the partisan disputes," Blumenthal says. "The cost [of this brewery tax cut] is minimal and the benefits potentially very meaningful."
The trouble, as usual, is that Republican vs. Democratic politics color everything and screw up everything, even when it's stuff both sides actually want.
"The obstacle to moving anything through Congress, when it has any cost whatsoever, presents difficulties," Blumenthal adds, with what might be described as masterful understatement. "It could be caught up in disputes over the transportation bill or student loans" or a dozen other big-ticket items, he says.
The goal now, Blumenthal says, is to attach this sucker to some larger piece of legislation that will really pass Congress and make it to President Obama's desk. "It's like hooking a car up to a train that's actually going to reach the station," says Blumenthal.
Blumenthal's enthusiastic press release on the proposed federal tax cut didn't happen to mention that these Connecticut breweries are now laboring under the additional weight of higher state booze taxes. Connecticut's government leaders decided last year to boost the state tax from $6 a barrel to $7.20 a barrel for beer to help plug millions of dollars' worth of holes in our deficit-riddled state budget.
That's a gut-wrenching 20 percent tax increase.
"It was the first tax increase on alcohol in Connecticut in 20 years," explains Sarah Kaufman, spokeswoman for the state Department of Revenue Services. According to Taxfoundation.org, Connecticut ranks 24th among the 50 states with its 23-cents-per-gallon tax on beer. Alaska ranks as the highest-taxing state, with a levy of $1.07 per gallon, with Wyoming coming in 50th with just .02 cents per gallon tax.
Blumenthal says the state tax increase is "all the more reason" for doing the federal tax cut. He says he's talked to Gov. Dannel Malloy about getting the federal tax reduction and that the governor fully supports the idea.
"We didn't talk about state taxes," says Blumenthal diplomatically.
Naturally, the brewing industry is all for the federal tax cut, which would slash the federal take on the first 60,000 barrels of beer produced annually from $7 per barrel to $3.50. Blumenthal estimates that would save Connecticut's 23 little breweries and brew pubs something like $300,000 a year. The head of Thomas Hooker Brewing Co. estimated it would reduce his company's taxes by $40,000 to $50,000 a year.
One study for the Brewers Association estimated the federal tax reduction would cost the U.S. Treasury about $81.9 million over five years — literally a drop in a federal bucket that's already a trillion dollars in the red. The Pentagon probably spends more than that every year on urinal splash guards.
Blumenthal is one of 42 Senate sponsors of the bill, which was introduced again last year by U.S. Sens. John Kerry, D-Mass., and Mike Crapo, R-Idaho. The legislation is apparently still before the Senate's Finance Committee, while a similar House bill is sitting in that chamber's Ways and Means Committee, despite the scads of bipartisan U.S. Reps. who have signed on as co-sponsors.
"We hope it will be part of [congressional] action on taxes this year or early next year," explains Blumenthal.
Now that's a comforting, optimistic sort of thought.
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