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- Abusive Tax Policies Are to Blame for Corporations Going Overseas - October 18, 2014
Senators Tom Coburn (R-OK) and Jim DeMint (R-SC) introduced a pair of legislative amendments that would have ended ethanol-related boondoggles that cost U.S. taxpayers and consumers around the world billions of dollars annually. Coburn’s amendment failed on a 40-59 vote to reach the necessary 60 votes for cloture, and DeMint’s amendment—which would have eliminated the ethanol mandate—did not even come up for a vote.
In the vast wealth redistribution machine that is the U.S. government, those billions of dollars don’t disappear. They end up in the bank accounts of grain farmers whose crops are turned into ethanol, oil companies that use ethanol, and companies that make ethanol, such as Archer Daniels Midland.
ADM is the nation’s largest ethanol producer. It happens to be headquartered in corn-rich Illinois, which happens to be the home state of Democratic Senate Majority Whip Dick Durbin , who happened to lead Senate opposition to the amendments with backing from President Barack Obama, who also happens to call Illinois his home.
ADM’s reach extends far outside Illinois. It has operations across all of North America and in much of South America, Europe, Africa, Asia, and the Middle East—and in the halls of Congress and other legislative bodies. ADM lobbies lawmakers the world over, and it receives government handouts from all around the globe.
I don’t mean to pick on ADM. But being the biggest recipient of the tens of billions of dollars annually that our government forces people to pay to prop up ethanol makes ADM the biggest target of criticism of this nation’s corrupt, wasteful, and abusive ethanol policy.
No, let me correct myself. The biggest target is our corrupt, wasteful, and abusive Congress. The U.S. ethanol industry probably would not exist if not for Congress having approved a 45-cents-a-gallon tax credit for blending ethanol into gasoline, a 54-cents-a-gallon tariff on imported ethanol to protect U.S. ethanol producers from foreign competition, and requirements to send the amount of ethanol blended into gasoline soaring in coming years. Ending the tax credit alone would have saved American taxpayers $6 billion a year.
Ethanol is consuming more than 40 percent of U.S. corn production and 20 percent of the world’s sugar cane crop. A report released in May by the World Bank and nine other international organizations noted, “between 2000 and 2009, global output of bio-ethanol quadrupled and production of biodiesel increased tenfold.” The huge increases have “been largely driven by government support policies,” according to the report.
The report further projects world prices of coarse grains could rise up to 13 percent, oilseeds 7 percent, and vegetable oil 35 percent on average each year from 2013 to 2017 because of government-subsidized ethanol production. (The report is available here.)
Desperate millions around the world who can barely put food on the table will have their lives made more desperate by America’s continued ethanol policy.
Here at home, our insolvent government will spend more billions of dollars it does not have on ethanol, forcing our taxes up. Our transportation costs will rise because ethanol is more expensive than gasoline and delivers fewer miles per gallon. And we too will suffer rising food costs.
Ethanol production also harms the environment by consuming a huge amount of precious fresh water. In addition, the subsidies and mandates encourage farmers to plant in marginal crop lands that otherwise would be left to nature.
Here’s what ethanol is all about: Government forces billions of dollars from around the world to flow to a small number of businesses that use some of the money to lobby for still more government handouts and protections.
The ethanol scam is one of the clearest examples we have of the corrupt and incestuous relationship between big business and big government.