Lower Taxes, More Beer!

By Eric Misterovich

You might not have noticed, but we are in the midst of an American beer renaissance.  Craft breweries are one of the fastest growing industries in the country, and the industry is expanding at a rate faster than any other time since Prohibition ended, especially in states like Michigan, where Michigan microbreweries have boomed.  At over 9,000 years old, beer is one of the oldest drinks on the planet, and it is the third most popular drink in the world after water and tea.  But what caused the rise of the craft brewing industry in the United States?

To discover the cause, we have to take a step back in time to the late 1970s.  Back then, there were only 50 breweries in the United States, and most of them produced the same style of beer—a pilsner lager.  However, the stage was about to be set for the craft brewing explosion leading to the over 2,300 breweries that we have in the United States today.

It all started when the U.S. Brewers Association successfully lobbied Congress for a decrease on excise taxes for small brewers.  Through the lobbying efforts of the U.S. Brewers Association and some big names in the industry, President Gerald Ford signed H.R. 3605 into law that reduced the federal excise tax from $9 to $7 a barrel on the first 60,000 barrels produced for virtually all breweries in the country.  This tax break started the craft beer explosion that we are seeing today.

While the tax break certainly helped the rise of the craft brewing industry, many craft brewers today get their start in home brewing.  However, until February 1979, home brewing was still illegal on a federal level.  The ban persisted due to an oversight after the repeal of Prohibition that allowed home wine making but not home brewing.  A push from home brewing activists in California led the federal government to legalize home brewing operations up to 200 gallons a year per household.  The vast majority of states have followed suit, and today home brewing is legal in every state except Alabama.

The craft brewing industry has seen explosive growth in recent years.  Had it not been for the lobbying efforts of a few dedicated beer advocates in the late 1970s, it might never have happened.  How long the craft brewing industry will continue its explosive growth remains to be seen.  One thing is certain right now: it’s a great time to be a craft brewer, but it is an even better time for beer lovers.  The next time you head to the store and pick up a six pack of your favorite craft brew, remember to thank the beer advocates of the late 1970s.  Their hard work led to the delicious brew you are about to enjoy.  Cheers!

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