A couple of days ago we posed a question – “Is VEETC a ‘go’ in the lame duck session of Congress?” It appears that we are even closer than we were a couple of days ago.
Politico reported on Friday that Senate Finance Committee Chairman Max Baucus (D-Mont) included a one-year extension of the Volumetric Ethanol Excise Tax Credit at 36 cents in his much larger middle-class tax cut package presented on Thursday. While there are a couple of things in the article that corn farmers might disagree with, let’s focus on the positive.
Extending the tax incentives for ethanol, regardless of feedstock, would save 112,000 jobs from being lost. That is nearly 30% of the 400,000 jobs ethanol production helps support today. Failure to extend the Volumetric Ethanol Excise Tax Credit (VEETC) would reduce U.S. ethanol production capacity by 38% and eliminate tens of thousands of jobs in rural communities already hemorrhaging employment opportunities. Can American’s really afford to not extend the tax credit?
The RFA reports that tax incentives for ethanol are one program that pays for itself, and in this climate of economic uncertainty and growing budget deficits, that’s difficult to ignore. In 2009, the outlay from the Federal Treasury for VEETC and the Small Producer Tax Credit totaled $5 billion. By comparison, the Federal Treasury saw $8.4 billion in increased revenues from the ethanol industry – a net positive return of $3.4 billion. This doesn’t include tens of billions in increased state and local taxes, increases in household income, and savings resulting from fewer imports of oil.
Illinois corn farmers continue to believe that VEETC is important to the life of our only growing market for Illinois corn. And the self-service aside, have we lost sight of the fact that ethanol provides the U.S. with energy security? As we remember Pearl Harbor tomorrow and the millions of U.S. soldiers that lost their lives, both on that day and in all the days since, is it not important to add energy security to the list?
Bottom line, the positives far outweigh the negatives for this important tax credit. Thanks to Senator Baucus for including it in his tax package last week.
The report, entitled “Importance of the VEETC to the U.S. Economy and the Ethanol Industry,” was prepared by economist John Urbanchuk, Technical Director at ENTRIX, and commissioned by the Renewable Fuels Association.