Looking for a Tax Rebate this Year? Find it in Corn Ethanol!

Many members of Congress were elected in November promising to save money and cut unnecessary government spending, yet these same members continue to defend a wasteful, expensive, and environmentally damaging program.  But while Congress has been quick to vote to cut programs protecting our air, water, and natural resources, they have been completely unwilling to cut wasteful tax credits for corn ethanol. In fact, just two short months ago, Congress voted for a one year extension of the Volumetric Ethanol Excise Tax Credit (VEETC), a biofuels tax credit that will cost US taxpayers almost $6 billion per year and would contribute more carbon pollution than it saves. 

Subsidies for biofuels production date all the way back to 1978 when Congress started subsidizing  fuel that was blended with ethanol by  giving a “blender’s credit” of  $ .40 for each gallon of ethanol blended into gasoline. The tax has been raised and lowered numerous times over the years and became the Volumetric Ethanol Excise Tax Credit in 2004. VEETC primarily supports corn ethanol, which when all direct and indirect emissions are added, creates more global warming pollution than the oil it is supposed to replace. 

A 2009 report by researchers at the University of Michigan found that key species of grasslands birds have experienced population declines in areas where there have been increases in corn driven by corn ethanol demand. Increased corn ethanol production also leads to increased water pollution soil erosion, and decreased habitat for wildlife.  Additionally, since the Renewable Fuels Standard already mandates oil companies to blend ethanol, subsidies like VEETC are not needed to support ethanol production. In fact, the Government Accountability Office just released a report this week saying that this subsidy is duplicative.

Earlier this week, the National Wildlife Federation, along with a coalition of 90 groups, ranging from the Heartland Institute to Greenpeace, and from the National Meat Association to Taxpayers for Common Sense, signed a letter urging Congress to allow this wasteful tax credit to expire.  This diverse group of business associations, taxpayer advocates, hunger and development organizations, agricultural groups, free-market groups, religious organizations, environmental groups, and public interest organizations are united in their opposition to this wasteful and duplicative tax credit.  Instead of paying big oil billions of dollars to obey the law, Congress needs to let VEETC expire and save taxpayers money. 

Learn more about truly sustainable, economically viable biofuels in Growing a Green Energy Future: A primer and Vision for Sustainable Biomass Energy.