If you’ve read Lauren French’s Politico article on the two beer tax reduction bills currently under consideration in Congress, you might think that the Competitive Enterprise Institute views the bills as a threat to federal revenue, Brewers: Tax cuts good for what ales us (October 30, 2013). Let me set the record straight: as we state in our paper BEER and Small BREW Can Be Good for You, we believe that in the short term the BEER Act, which reduces the federal excise tax for beer producers big and small, will be a boon to the nation’s economy, but that the ideal course of action is to repeal the Federal excise tax on beer entirely. The federal beer excise tax was first enacted in 1862 to help pay for America’s massive debt after the Civil War. It should have been repealed in 1933 with the repeal of national prohibition and the passage of the 21st Amendment that turned over authority to regulate intoxicating liquors to the states. But more than 150 years later the beer industry is still saddled with the tax in addition to the state excise taxes, federal business taxes, state business taxes, and sales taxes that have been added since—all of which make the business of beer more costly and increase the cost consumers have to pay. All told, taxes now account for almost half of the cost of a beer. The two bills before Congress seek to lessen the burden on brewers. The Small BREW Act (S. 917, H.R. 494), would reduce the federal excise tax for small brewers only (which it defines as those making less than 6 million barrels a year) while The BEER Act (H.R. 1918, S. 958), would reduce taxes for all brewers. French stated in her article, “The Competitive Enterprise Institute estimates the BEER Act would result in a loss of revenue to the government of $1.68 billion a year. The paper estimates the Small BREW Act would reduce tax revenue by $65 million a year.” To correct this statement, our paper notes that the bills will return this amount to the American economy. While the bills reduce the direct revenue paid to the Federal government, that money will be rerouted to state economies, spent on equipment, potentially new employees, and put back in consumers’ and business owners’ pockets. As we've written plenty about, “sin taxes,” which attempt to modify consumer behavior by raising the cost of so-called “bad” products, have been shown to be ineffective and often have very negative unintended consequences. Furthermore, we believe that attempting to socially engineer Americans’ beer drinking is not something our Federal lawmakers ought to be dabbling in. As noted in our paper, while either of the beer bills will be a boon to the business of brewing, we slightly favor the BEER Act in the short term, for the simple reason that it does not discriminate between large and small brewers; it cuts the Federal excise tax across the board. However, if we truly want to create a “fair playing field” in the beer business we ought to expunge completely the federal excise tax on beer and for that matter all alcohol.