Monday, April 23, 2012

After 30 Years, Ethanol's Federal Tax Credit Expires

Posted: Monday, April 23, 2012

For the last 30 years, The U.S. Federal government has been subsidizing the use of Ethanol, which is mostly produced from corn. Since the tax credits' expiration earlier this year, the issue of renewing the federal subsidy has been difficult for candidates seeking office throughout the Midwest. The Ethanol subsidy, "In the last year, when Congress was preoccupied with deficits and debt, became a symbol of corporate welfare."

Currently, almost 40% of the nation's corn crop contributes to the creation of Ethanol and related products, including animal feed. Over the last 30 years, more than $20 billion in subsidies have been provided to encourage the use of the product. Generally, proponents of the Ethanol tax break accepted the expiration of the tax credit without a big battle. However, Senator Charles E. Grassley, Republican of Iowa and a leading advocate for the Ethanol subsidy noted that Ethanol is used to reduced retail gasoline prices for America and reliance on foreign oil.

"The end of this giant subsidy is a win for taxpayers, the environment and people struggling to put food on the table" said Michal L. Rosenoer, a policy analyst from Friends of the Earth "Production of ethanol, with its use of pesticides and fertilizers and heavy industrial machinery, causes soil erosion and air and water pollution. And it means that less land is available for growing food, so food prices go up"

Representative Jeff Flake, Republican of Arizona, said; "with record deficits and a ballooning national debt, it was ludicrous to expect taxpayers to pay billions to prop up a mature industry that should be able to fend for itself."

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