Beer Distributors Got Their Long-Coveted Tax Cut. Here’s Why It Matters.
In 1993, then-President Bill Clinton had the bright idea to reform this country’s health care system, and the less bright idea to raise the federal excise tax on beer to help pay for it. Earlier that decade, Congress had already doubled the levy, incensing America’s big brewers — and, crucially, their distributors.
Around the country, Anheuser-Busch and its middle-tier affiliates wrapped some 10,000 trucks with black and yellow decals that blasted the earlier tax and warned against the coming one. “Higher beer taxes are simply unwise and unfair,” Michael Stern of Stern Beverages, Inc., groused to Moline, Ill.’s newspaper, The Dispatch, in February 1993. Like his brethren across the country, Stern’s trucks had begun advertising a hotline — 1-800-BEER-TAX — to urge observers to register their displeasure in Washington, D.C.
While the mighty red network fomented a popular backlash from outside the Beltway, the National Beer Wholesalers Association (NBWA) worked the inside angle. The trade org, which would become known around the District as “the toughest lobby you’ve never heard of” in part thanks to this 1993 performance, “sent an Action Alert to all NBWA members[,] who lobbied the White House through letters and phone calls,” wrote Conor McGrath in a journal article published by the “Handbook of Public Affairs” in 2005. The pressure worked. “When the reform package was announced, it contained no mention of tax increases on beer.”
Just over three decades later, the landscape — in Washington, D.C., and in the beer industry — has changed dramatically. But the NBWA remains a potent force in both. And so, as distributors put the screws to Clinton and Congress in the early ‘90s to prevent a tax hike, the middle tier has been pushing hard to secure a big tax cut from Trump and Congress in the early ‘20s. With the passage of the so-called One Big Beautiful Bill in early July, it got one. Well, more than one.
“With the enactment of the budget reconciliation package, Main Street businesses can now more confidently invest in their operations and communities,” NBWA president and chief executive officer Craig Purser said in a July 3 statement hailing the legislation, which the Congressional Budget Office projects will add $3.4 trillion — with a T — to the national deficit over the next 10 years. A portion of that debt will come from revenue lost to a newly permanent 20 percent tax deduction for pass-through entities (which is how most beer distributorships are structured), as well as cuts to the estate tax and other deductions or allowances on federal filings that are favorable to the middle tier.
“NBWA members worked hard to make their voices heard on Capitol Hill throughout the legislative process,” Purser continued in last month’s release. (Reached by email, he declined to comment further for this column on the record.) “That dedication was instrumental in today’s positive outcome for the beverage distribution industry.”
There’s no doubt that the NBWA’s members toiled for this cut. Since the passage of the first Trump administration’s Tax Cuts and Jobs Act of 2017, which codified American history’s biggest-ever rate cut for corporations (from 35 percent down to 21 percent) but left pass-throughs with only a temporary 20 percent deduction set to expire in 2025, the trade group has been laying the groundwork in D.C.’s halls of power to make that “relief” permanent.
It’s been a long fight, and unlike the excise tax battle of yore, this one certainly wasn’t exclusive to the beer business. Pass-through entities across the economy can take advantage of the deduction, known as 199A. But distributors, through geographical happenstance and relentless organizing, are a powerful political bloc. And they went hard at this, even going so far as to have Trump 1.0 star (derogatory) Kellyanne Conway give them pointers on their pitch at the NBWA’s annual legislative confab in D.C. this past spring. Whether that helped is hard to say. But a few months later, the middle tier would indeed get its way.
(Not to say “Hop Take told you so,” but, y’know, it kinda did.)
But while this may be a clear victory for beer distributors, it’s less clear what it means for the rest of us. After all, $3.4 trillion is a pretty big ball of debt, and the American economy is now chained to it.
“This is a really big tax cut for business owners,” says Owen Zidar, professor of economics and public affairs at Princeton University. “If you take [the 199A] provision and the estate tax provision, which basically loosened the estate tax, that is like a trillion dollars over 10 years, which is the same order of magnitude of the Medicaid cuts and the [Supplemental Nutrition Assistance Program] cuts.”
[Disclosure: Last year, Zidar and his writing partner hired me to write a report about beer distributors for their book project. That engagement concluded in the fall of 2024; the book is forthcoming.]
More troubling, Zidar contends that we won’t get much in return. While the 2017 raft of cuts generated “some positive investment effects that were sizable” compared to its massive cost, he tells Hop Take, Uncle Sam got even less bang for his buck out of the temporary 199A deduction, which yielded “no evidence of investment or employment effects.” Now it’s permanent.
Of course, framing is everything. In Purser’s formulation to his constituents back at the NBWA’s legislative conference in April 2025, distributors weren’t even asking for a “cut” as such. “When you advocate for the extension of the current tax policy,” he told attendees, per a report from Brewbound, “all you’re asking for is for Congress to not raise your taxes, particularly when Wall Street businesses receive permanent relief.”
Is it a tax “raise” when a temporary deduction expires, or just a pre-planned and well-advertised reversion to the previously agreed-upon standard? Opinions vary; mine is “not really.” But you can see why it was a compelling setup for wholesalers, and for the members of Congress they buttonholed about 199A.
Now, I should emphasize again that the NBWA was hardly the only trade group lobbying for these cuts. There were literally hundreds of organizations representing Lord knows how many members. And the NBWA isn’t even the only beer trade group celebrating. Both the Beer Institute and the Brewers Association put out statements noting the benefits for brewers. It’s legislators’ jobs to look out for their constituents; it’s lobbyists’ jobs to look out for theirs. The Republican Congress that passed these cuts was looking out for Trump — and itself. Channel any frustrations accordingly.
What this means for the future shape of the three-tier system isn’t clear yet. The glass-half-full view — one presented by Purser et al. — is that the permanent deductions will enable “Main Street” pass-through firms to compete more fairly with their counterparts on “Wall Street” that have enjoyed a permanent cut since 2017. There’s some truth to the premise! For all the critiques of the middle tier, it is true that beer distributors are often family-owned businesses that employ lots of people in comparatively well-paying jobs that can’t be offshored, or even easily automated. That sort of business is important to its community, and increasingly rare. There’s a case for protecting it from consolidation by tax-advantaged institutional investors.
But there’s not much evidence that this new tax regime will accomplish that. And as Zidar’s research shows, many beer distributorship owners already tend to be what he and his co-author, University of Chicago economist Eric Zwick, have coined the “stealthy wealthy.” They’re literal mom-and-pop businesses, sure, but Mom and Pop are often loaded.
“Being able to kind of cloak yourself in the flag of ‘small business’ is a very effective thing to do politically,” says the economist, citing recent Gallup polling that shows that tranche of the economy as the institution Americans trust the most — more than “science” or even “the military.” The mantle helped beer distributors win franchise protections in the ’70s and ’80s, and defeat a tax hike in the ’90s. Now, it’s helped them score a major tax cut.
“The main, first-order thing that’s going to happen is the owners of beverage distributors are going to get a lot richer,” says Zidar. Based on the last go-round, there’s little reason to expect that wealth will turn into more jobs, better wages, and increased investment. More likely, he predicts, it will turn into more entrenched incumbents with more influence. “Some of that money is going to go to buttress[ing] their lobbying power.”
And maybe even 1-800-BEER-TAX truck wraps, if future fights call for them.
🤯 Hop-ocalypse Now
Well, Terry “Hulk Hogan” Bollea died last week, an event that would’ve been fully beyond the scope of this column but for the fact that he launched Real American Beer (RAB) in 2024. What happens to a celebrity’s suds-for-chuds brand after the celebrity in question has shuffled off the mortal coil? We’re finding out in real time, and it’s already weird. Last week, a publicist for the beer pitched a “story” about how sales spiked after the entertainer’s death, presumably due to collector rather than drinker demand. That’s grim enough as it is. I passed! But TMZ wrote it up, and in doing so quoted chief executive Terri Francis, who promised that RAB “will carry forward his vision and mission with the same passion and purpose — and that includes his desire to bring Hooters into the Real American family.” Bollea may be dead, but his sordid legacy of hucksterism lives on.
📈 Ups…
The North American Guild of Beer Writers has extended its Diversity in Beer Writing grant application window until Aug. 2 (tomorrow!)… Hard cider’s big legislative priority, the so-called “bubble bill,” was reintroduced in Congress… New Belgium Brewery’s slog to reopen in Asheville after Hurricane Helene last year is complete, but its distribution is still recovering from those temporary shortages…
📉 …and downs
Twisted Tea is in the red in NIQ-tracked off-premise accounts year-to-date through mid-July, whoa… Just 39 percent of Harris Poll respondents said they drank craft beer weekly in 2024, down from 45 percent in 2019… Brewers Association-defined craft breweries saw an estimated 5 percent production decline through the first half of the year…
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