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Last call for ethanol?


Sen. Coburn’s attempts to eliminate an ethanol tax credit have drawn support from The Economist, The Wall Street Journal and Investor’s Business Daily.

Clifton Adcock April 20th, 2011

A controversial amendment by U.S. Sen. Tom Coburn, R-Muskogee, that would end a tax credit for ethanol blending may come up for a vote when the Senate resumes session in May.


Coburn has not only caught flak over the amendment from some in the ethanol industry, but also from the conservative tax group Americans for Tax Reform.

Coburn said a bill to eliminate the Volumetric Ethanol Excise Tax Credit, which goes toward companies that blend ethanol, will save $5 billion annually.

Coburn’s attempts to eliminate the tax credit include an amendment to a Senate reauthorization bill for the Small Business Innovation Research Program, as well as Senate Bill 520, which Coburn introduced March 9.

The bill is currently in committee, but the amendment had anonymous holds placed on it to prevent it from coming up for debate.

“At a time when our nation is facing a debt crisis, it is an outrage the Senate won’t even allow a vote on my amendment to eliminate the ethanol corporate welfare subsidy and save taxpayers nearly $5 billion,” Coburn said in a statement. “If Congress can’t cut a corporate welfare subsidy the corporations themselves don’t want, what can we cut? Ethanol is a case study of how parochialism trumps progress in Congress. Sooner or later, the Senate will take a vote on this issue.”

Through procedural moves, Coburn has been able to force the amendment to a vote, which will likely take place when the Senate reconvenes in May, said John Hart, communications director for Coburn.

“The actual refiners want to get rid of it; they don’t believe they need it,” Hart said. “It’s really the (senators from corngrowing states) that want it.”

Coburn has displayed letters of support from the president of the National Petrochemical and Refiners Association, Taxpayers for Commonsense and Council for Citizens Against Government Waste in his efforts to eliminate the tax credit.

Stephanie Dreyer, spokeswoman for the ethanol advocacy group Growth Energy, said the subsidy was used as an incentive to get ethanol on the market, a goal she considers accomplished, since about 80 percent of fuel in the U.S. is blended with ethanol.

Growth Energy has put forward a plan that would eventually eliminate the subsidy and redirect some of the money toward infrastructure for ethanol, such as additional flex-fuel pumps and flex-fuel vehicles, Dreyer said.

“Growth Energy recognized that with the (tax credit), there are some flaws. No. 1, it actually doesn’t go to ethanol producers; it goes to the blender and most of the time that is an oil company,” she said. “It has served to grow the ethanol industry to this point, but the ethanol industry no longer has a problem producing ethanol; we have a problem accessing the market.”

However, Dreyer said the group opposes singling out the ethanol industry.

“Instead of looking down the road, he’s looking down his nose,” she said. “It is inequitable to have a debate about tax policy for one energy source — homegrown renewable fuels — without having that same debate about tax breaks for other competitive energy sources, including oil and gas. By reforming access to the motor fuels marketplace, we will be giving consumers the ability to choose their fuels, instead of having their choice made for them. With infra structure in place, the ethanol tax credit becomes less necessary.”

Americans for Tax Reform took issue with Coburn’s amendment, and he sent a letter to the group’s founder Grover Norquist, accusing the group of defending “distortions in the tax code” and “defending wasteful spending and a de facto tax increase on every American.”

Thus far, The Economist, The Wall Street Journal and Investor’s Business Daily have all sided with Coburn.

“He (Norquist) believes that eliminating tax earmarks is a tax increase, whereas we believe it’s inappropriate to use the tax cut to micromanage the economy and hide corporate welfare spending,” Hart said.

Americans for Tax Reform responded by posting an online letter, stating that it opposed Coburn’s amendment not because the organization supports the ethanol tax credit, but because it does not lower taxes in other areas to make up for the elimination of a tax credit and sets a precedent for possible future tax increases.

“(T)he best policy outcome is to eliminate the ethanol tax credit in a way that leaves money in the hands of taxpayers, not increases the amount of money going to Washington for the Appropriations Committees to spend,” ATR stated. “Your amendment as written to repeal the ethanol credit (unfortunately) does the latter.”

View a map of corn production by county and the location of state ethanol plants.

 
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04.25.2011 at 10:05 Reply

Remove the subsidy from corn based Ethanol and put it toward Kudzu and Switchgrass Ethanol.  Kudzu grows very fast and doesn't require pesticides which are made from oil products.  Switchgrass won't grow as fast, but it doesn't require pesticides and is a resilient crop which can be grown in numberous regions.  Neither of these plants will affect a food supply.  So put the subsidy where it will do the most good instead of killing it altogether.

 

 
 
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