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Coburn takes aim at ethanol subsidy

March 10, 2011
Oklahoma's Tom Coburn is teaming with Maryland Democrat Ben Cardin to end tax credits for ethanol. The two U.S. Senators introduced a bill that would repeal the 45 cents-per-gallon credit refiners receive for mixing ethanol into gasoline.

From The Hill:

“The ethanol tax credit is bad economic policy, bad energy policy and bad environmental policy. The $6 billion we waste every year on corporate welfare should instead stay in taxpayers’ pockets where it can be used to spur innovation, stimulate growth and create jobs,” Coburn said in a statement Wednesday.

Congress renewed the credit through the end of 2011 as part of a broader tax agreement in the lame-duck congressional session in December.
Coburn and Cardin, in announcing the bill, pointed to a recent Government Accountability Office report on duplicative federal programs.

The study noted other federal drivers of the ethanol market including the Renewable Fuel Standard — which mandates increasing ethanol use — that was expanded in a 2007 law.

“The ethanol tax credit and the renewable fuel standard can be duplicative in stimulating domestic production and use of ethanol, and can result in substantial loss of revenue to the Treasury,” GAO found, noting that the tax credit resulted in $5.4 billion in foregone federal revenue last year.
 
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