Bill Introduced to Stop Tax Credits for Corn in the Gas Tank
Oklahoma news sources report that Rep. Tom Coburn is pushing to introduce a bill to end tax incentives to companies that blend ethanol into the gas mixture.
Coburn believes the ethanol blend in gasoline lowers fuel efficiency and drives food prices higher. He says the industry produces so much ethanol that it cannot all be used in the U.S. Exporting the excess to Europe subsidizes European drivers at U.S. taxpayers' expense. Coburn's bill is backed by food companies, meat producers, and environmental organizations.
The subsidy encourages corn producers to eliminate forests and open grasslands. Recently, the EPA allowed blended gasoline-ethanol mixtures to go up to 15%. Manufacturers say this will damage the engine on some cars and destroy lawn mowers. The subsidies expire on December 31 this year. Taking no action would cause them to go away.
However, Congress extended the subsidies in December of 2010, when they were set to expire at that time. Despite opposition from nearly everyone except corn growers and the oil companies who benefit from the subsidies, the extension was pushed through as a rider to the extension of Bush-era personal tax cuts. The subsidies cost taxpayers nearly $6B a year.
Support for a free market economy would imply that consumers should have a choice whether to buy ethanol-blended gasoline. If it made the car run better, improved the environment, and lowered our dependence on foreign oil, the free market theories say, consumers would choose it.
Critics of the subsidy say it does none of these things. Supporters of the subsidy say they have built an entire industry around ethanol production now, assuming these tax incentives.
To end the incentives would end the jobs produced by the incentive. But, if the reason we are burning corn in our cars is to save the jobs created by a tax incentive for burning corn in our cars, why not switch that incentive to some other industry? Inquiring taxpayers want to know who gets this benefit and why.