With bipartisan support, the Senate voted yesterday in favor of the Coburn-Feinstein amendment (to S782 – Economic Development Revitalization Act of 2011) that would repeal the ethanol tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. and tariffTariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters. levied on imported ethanol.
The final vote was 73-27, sending “a powerful message that the days of big subsidies for ethanol are coming to a close,” according to Senator Feinstein. Feinstein believes that “this is a good first step” in reducing the deficit.
It certainly is a good first step in the direction of taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. reform. And it’s only one of many. As we said yesterday, the future of sound tax policy requires careful analysis to ensure that market interference and wasteful spending through the tax code remains limited. Regardless of the deficit, these types of tax breaks are bad policy and should be eliminated.
Hopefully the House will follow the Senate’s lead. If not, we might as well have taken two steps back.
More on ethanol subisdies:
Coburn, Norquist Dispute Ethanol Tax Credit Repeal
Attention Iowa: Your Ethanol Subsidies Have Little Economic or Environmental Justification
Tax Dollars for Iowa Ethanol Producers
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