I had a message this afternoon that the Wall Street Journal wanted our opinion on the latest developments in the New York State beer world. It turns out that already, this weekend, there is state and federal legislation in the works in response to our litigation that will give small brewers a leg up against larger ones, but do it in an even-handed, non-discriminatory, transparent, and constitutional way. At least that's what the Journal told me.
If what I hear is right, everyone will continue to have to pay the New York excises taxes, which is fair. But there will be a new tax credit for "small" brewers (I use those quotation marks only because what's small to New York is definitely not small to me) that should balance the amount of the tax. In other words, New York will just give the New York brewers' tax back to them at the end of the tax year. My understanding is that tax credits like this to help resident businesses are perfectly constitutional and as we said in our previous statement on this totally manufactured falderal, it's none of our business what New York does with its money. I'm just glad that it will now be very clear, even for people who aren't that up on tax policy, that what's really going on here is that New York is just giving money from its treasury to brewers to do with whatever they want.
But the much better news is this: according to the Journal, Senator Charles Schumer is supposedly sponsoring legislation that will give excise tax breaks to small brewers -- not just to New York's small brewers (because that is unconstitutional), but to all small brewers across the country. Of course that includes the small brewers that we've worked with in various ways -- most immediately Jolly Pumpkin, Saint Somewhere, and Anchorage. The word is that this legislation will give "craft" brewers a cut from $7 to $3.50 on the first 60,000 barrels they produce, and a cut to $5 on everything beyond that up to 1.9 million barrels. Assuming that this is all done constitutionally -- and of course Senator Schumer will assure that it is -- I'd say this is a very happy result for everyone who cares about small brewers, including big small brewers. (To me, that 2 million barrels is an astronomically high number, but that's another discussion.)
So, congratulations all around. I want to emphasize again, however, that although the air has been cleared somewhat on the subject of beer taxes, and I'm glad of that, our focus was always on the label registration fee scheme, which really hurt out-of-staters, and us in particular. I hope to hear soon that small brewers -- again, not just New York brewers, but all small brewers -- will be exempted from that burdensome and pointless money-making gambit the S.L.A. is running.
As I said to the guy at the Journal, we're very happy that the problem with the New York beer tax is being fixed so quickly, but it's hard not to feel a bit piqued at what's gone on in the past week and a half. This was never about hurting New York's brewers, of course, but about modifying the old fee and tax scheme that on its face (as lawyers like to say) totally screwed out-of-state small brewers. The way the system works is that sometimes someone has to level the playing field through the courts, which allows the legislature, now with proper guidelines, to rebuild. I have to believe that most New York brewers knew that it was about fairness, and remaking the system, while only a few saw it as an attack or a devious plot by evil geniuses to take money away from them, and went incendiary. Despite hysterical talk about torches and pitchforks, bombs and wildfires, this reform is actually a pretty orderly and sensible process. Filing a lawsuit -- especially one that was decided and won quite easily -- is not the same thing as throwing a Molotov cocktail.
I would like to revert to the very last paragraph of the statement we issued last week. Specifically, this:
"There are plenty of ways to help in-state small brewers that don't involve totally screwing out-of-state small brewers. Presumably, even while a few more emotional types are hysterically trying to vilify us, cooler heads at the New York State Brewers Association are already getting legislators to look at sensible non-discriminatory measures to help small brewers in New York. Even though they haven’t been all that endearing lately, we’ll support them 100% when they do."
This is not a "we-told-you-so," but to me it's necessary to point out that the scenario we pictured was exactly the case. At the same time that certain brewers were preaching fire and vengeance -- dispatching the most visible (and surprisingly gullible) of their number to scream and rant "privately" that we are the Antichrist, and warn that we were about to become famous in a way that we wouldn't like, as well as spreading complete fabrications in places like the New York Post, where hot-heads run the presses -- they were swiftly and quietly off to Albany to make perfectly sure that the Apocalypse they were wildly predicting in public was never going to happen. In other words, they were simultaneously trying to whip up public anger against us and taking advantage of the opportunity our lawsuit opened up.
So yeah, as promised we are going to support the new measures to benefit everyone in New York -- from the little Barrier Brewery to the $30 million-a-year Brooklyn Brewery (and even the much bigger F.X. Matt) -- and elsewhere.
Dan Shelton
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