Posts Tagged ‘ethanol’

Tax Roundup, 5/30/15: Antidumping edition. And: permanent bonus depreciation advances.

Friday, May 30th, 2014 by Joe Kristan

20121120-2Iowa Public Radio, Can Employers Dump Workers On Health Exchanges? Yes, For A Price:

The latest tweak from the Internal Revenue Service essentially prohibits employers from giving workers tax-free subsidies to buy policies in the online public marketplaces created by the health law. The New York Times first reported the rule.

But the headline on the story, “I.R.S. Bars Employers From Dumping Workers Into Health Exchanges,” overstates the case. Nothing stops employers from canceling company plans and leaving workers to buy individual policies sold through the exchanges — as long as the companies pay the relevant taxes and penalties, said Christopher Condeluci, a Venable lawyer specializing in benefits and taxes. Those would vary according to a company’s size and circumstances.

The ACA requires employers with more than 50 “full-time equivalent” employees to provide “adequate” coverage.  The IRS says that subsidizing employees to use the ACA exchanges doesn’t work.  This, of course, is the same IRS that arbitrarily and unlawfully just waived the requirement in the first place through 2014, and for those with under 100 employees through 2015.  Some laws are more equal than others.

It’s fascinating that the Administration refers to the practice of sending employees to buy policies on the exchanges as “dumping.”  The exchanges are a centerpiece of Obamacare, touted as an important step in making affordable coverage available for everyone.  Suddenly they are a “dump.”  Obamacare fines individuals for not patronizing that very dump.

 

20130422-2Permanent bonus depreciation advances in House.  Tax Analysts reports  ($link, my emphasis)):

Camp said the extenders the committee considered had been renewed enough times that most of them have been or soon will have been extended for at least 10 years, the budget window period. “If we’ve extended something for 10 years, let’s call it what it is, [and] that’s permanent policy,” he said. “We shouldn’t have to raise taxes other places in the economy to keep current tax law.”

The costliest bill the committee approved was H.R. 4718, introduced by Ways and Means Committee member Patrick J. Tiberi, R-Ohio. That bill would permanently extend bonus depreciation, allowing businesses to immediately deduct 50 percent of qualified purchased property. The bill, passed on a 23-11 vote, would expand the definition of qualified property to include owner-occupied retail stores. It would lift restrictions to allow for more unused corporate alternative minimum tax credits, which businesses can claim in lieu of bonus depreciation, to be used for capital investment.

Expiring provisions are a lie.  Any extension of an “expiring” provision should be counted as permenent under budget rules, as they pretty much are.

Related: Dave Camp’s Great Bonus Depreciation Flip-Flop (Howard Gleckman, TaxVox);  Negative GDP Growth Illustrates the Need for Bonus Depreciation (Alan Cole, Tax Policy Blog)

 

Wind turbineOne of these is not like the other.  The Des Moines Register coverage of last night’s Iowa GOP Senate Primary debate has something I never expected to see in a story about a candidate for statewide office:

Whitaker stands out because he doesn’t support the Renewable Fuel Standard, or any tax breaks for any energy source. “If we don’t believe in mandates for health care, we shouldn’t believe in mandates as it relates to energy,” he said.

All other candidates in both parties genuflect to the Renewables Subsidy idol.  In Iowa, ethanol apostasy is rare; more typical is the GOP governor who is all about picking winners and losers, when the winners are an influential local constituency.

Related: Governor’s press conference praises construction of newest great pyramids.

 

The IRS needs to regulate these people to stamp out fraud.  “Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that six former employees of the Internal Revenue Service have pleaded guilty to receiving unemployment benefits while they worked at the agency.” (Department of Justice press release)

Robert D. Flach serves up your Friday Buzz.  “Who would have guessed that I would agree with a group of CPAs?”

TaxProf, The IRS Scandal, Day 386

 

20140516-1

 

 

And now they’ve proved it.  A Minneapolis husband and wife who ran a website called imarriedanidiot.com were convicted last week on federal tax charges.” (TwinCities.com)

Across the road, of course.  Where are all the Chickens?  (Paul Neiffer)

News from the Profession.  This Big 4 Firm Just Ruined Selfies for Everyone (Going Concern)

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Moonshine run through a tax return is still moonshine

Thursday, June 16th, 2011 by Joe Kristan

Congress failed this week to end the ethanol subsidy, largely because the subsidy is in form a tax credit. Grover Norquist therefore deems its elimination a “tax increase” and a violation of the Americans for Tax Reform’s “no tax increase” pledge.
In real life, it’s spending run through a tax return. The credit is refundable, as explained in IRS Publication 510 (page 24):

To the extent the alcohol fuel mixture credit, biodiesel mixture credit, renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit exceed taxable fuel liability, a payment is allowed and may be taken as a credit on Schedule C (Form 729), as a refund on Schedule 3 (Form 8849), or as an income tax credit…

So producers who have no taxes otherwise can file a form and get government money back, just like in a welfare office. Because the IRS functions as the welfare office, Mr. Norquist says that cutting the subsidy is a tax increase.
The episode provides a valuable lesson to corporate welfare seekers: get your subsidies through the tax code, so Grover Norquist will be on your side.
Other coverage:
Tax Policy Blog: The Ethanol Tax Credit and Sound Tax Policy
Investors Business Daily: Big Corn Eats GOP
Tax Vox: The GOP, Ethanol, and the No-Tax Pledge
Tax.com: It’s Time to Lose Grover
Related: Spending run through a tax return is still spending

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Missouri advances, Iowa goes backwards

Tuesday, May 3rd, 2011 by Joe Kristan

After one of Iowa’s targeted tax credit programs exploded in scandal, and a blue-ribbon panel reported that there was no evidence that any of the two dozen or so other ones do any good, the Iowa legislature responds with… more tax credits! From GlobeGazette.com:

The Iowa Senate voted 48-1 on Monday to boost incentives to promote the use of renewable fuels. Senate File 531, which goes to the House for consideration, would boost the tax credits offered to retail stations that meet the renewable fuel standards established in Iowa in 2006. The legislation approved Monday would provide additional incentives to retailers of 1.5 cents per gallon on top of the schedule already in law for 2012 and beyond, said Sen. Rob Hogg, D-Cedar Rapids, the bill’s floor manager. “There is no back-sliding” on the schedule to promote more ethanol and biodiesel sales, he said. The measure also would provide a separate tax credit for 15 percent ethanol-blended fuels, which the industry hopes will replace the current E-10 standard, Hogg said.

Leaving aside the question of whether an ethanol industry is even worth promoting, the idea that it can be advanced just by promoting sales in one state is wacky. But lawmakers like the delightfully-named Mr. Hogg are always ready to give a little more of your money to an industry already awash in taxpayer money.
In Missouri, they seem to be catching on. Tax Analysts reports that the Missouri Senate has approved, 32-2, a major cutback in targeted tax credits ($link):

The legislation would:
* reduce the historic preservation credit from an annual cap of $140 million to $75 million beginning in 2012;
* reduce the state’s low-income housing credit, which is now allowed over a 10-year period, to a five-year period;
* prohibit the issuance of 4 percent low-income credits after June 30, 2011;
* limit the total low-income housing tax credits available annually to $80 million; and
* cap the affordable housing assistance credit at $8.5 million instead of its current $10 million per year.
HB 116 would also prohibit the authorization of some credits after August 28, 2014, including the neighborhood preservation tax credit, the family farm breeding livestock tax credit, the agricultural product utilization tax credit, the qualified beef tax credit, and the wine and grape producer tax credit.
The measure would further prevent the authorization of some other credits after August 28, 2015, including the maternity home tax credit, the pregnancy resource center tax credit, the disabled access tax credit, the residential treatment agency tax credit, and the food pantry tax credit.
Finally, the bill would repeal the charcoal producers tax credit, the self-employed health insurance tax credit, the railroad rolling stock tax credit, and the brownfield jobs/investment credit.

And I’m sure that the Missouri charcoal producers are just as good, hard-working folks as Iowa’s ethanol producers.

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April Fools fun

Friday, April 1st, 2011 by Joe Kristan

While the Tax Update is too humor-impaired at this point in tax season to play April Fools jokes, those crazy Tax Foundation guys are up to the job:
Obama Urges Biden Gaffe Tax to Close Budget Deficit
New York Demands Income Tax from Orbiting Astronauts
D.C. Predicts Sales Tax Holiday Will Boost Baseball Wins
Parody is hard in the tax law, as their Congress Choosing Between Big-Government Newspaper Subsidy and Free-Market Newspaper Tax Credit shows. The story says a congresscritter named Papershill is proposing a 50% subsidy for publishing newspapers. Other critters come back with a “free market” alternative:

The counterproposal would provide a tax credit to each newspaper equivalent to 50% of expenses. Newspapers would submit their expenses for approval by a a subcommittee of elected officials to be eligible for the tax credit.
“Our idea is completely different from Papershill’s,” the sponsors said. “We’re giving tax cuts, not a subsidy program, while still saving newspapers, creating lots of jobs, and making sure newspapers are supportive of what we in Congress say and do.”
Early indications are that, while Papershill’s plan is doomed to failure, the compromise is likely to pass.
“If it lowers someone’s taxes, I’m all for it,” said one congressman. “Those who are opposed to this tax credit are just big government lackeys who want to tax America’s newspapers to death.”

While the Tax Foundation is engaging in satire, Grover Norquist is supposed to be serious. Yet he sounds a lot like the fictional Tax Foundation congresscritter when he acts as though just because the ethanol subsidy is run through tax returns, it is no longer a subsidy:

Mr. Norquist said his group opposed revoking the ethanol measure unless it was offset with another tax break, because that would constitute a net tax increase. He said that is the purpose of the group’s pledge, which dates from the mid-1980s.

By that logic, all you have to do is call any spending measure a tax credit, and any future cut in the subsidy becomes a tax increase. For Mr. Norquist and Americans For Tax Reform, that makes every day April Fools Day.

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Cheez Whiz crisis

Monday, March 7th, 2011 by Joe Kristan

Professor Maule notes rising commodity prices, including a 25% increase this year in the staff of life, Cheese Whiz. He falls back into a neo-Malthusian funk:

it seems to me that it is caused by the confluence of three major trends: political unrest, weather and climate disruption, and excessive population growth. Government intervention with respect to any of these issues sparks deep controversy, aside from the question of whether government of the United States can do much of anything about them on its own.

I would argue that government intervention is a far bigger cause of the problem than the “three major trends.” Around 30% of U.S. corn is being grown just to be burned as ethanol, with little or no savings of oil for the effort. That wouldn’t happen absent subsidies provided in the form of tax credits. All 20th Century famines were man-made. Any early 21st Century famine would be too, brought to us by “green” energy policy.

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Bush-era rate extension bill clears Senate, 81-19.

Wednesday, December 15th, 2010 by Joe Kristan

The Senate this afternoon passed HR 4853, the train-wreck year-end tax bill, 81-19.
The bill extends the Bush-era top income tax rates at all levels, including the 35% rate for ordianry income and the 15% top rate for capital gains and dividends. It revives the estate tax at a 35% top rate with a $5 million lifetime exclusion. It also “patches” the AMT for 2010 and 2011 and extends dozens of special-interest tax breaks through next year, including the research credit and biofuel subsidies.
Iowa’s Senators split on the final bill. Senator Grassley voted for the bill, as expected, but Senator Harkin, who had voted yes on a key procedural vote on the bill, voted against final passage.
The Hill reports that a House vote is expected tomorrow.
UPDATE: Kay Bell has more.
Link:
BIll Text
Senate Roll Call
Prior Tax Update coverage:
True confession
2010 100% bonus depreciation, Extenders, $5 million portable gift-estate tax exemption in ‘Framework’ text

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True confession

Saturday, December 11th, 2010 by Joe Kristan

Chuck Grassley Press Release:

I fought tooth and nail to secure the inclusion of both the ethanol and biodiesel provisions in the new legislative proposal. There were efforts by some congressional majority Democrats and the White House to weaken the tax policy for these alternative fuels. In fact, the current congressional majority allowed the blenders

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Is Ethanol still sacred?

Monday, December 6th, 2010 by Joe Kristan

The website The Iowa Republican (“News for Republicans, by Republicans) reprinted a floor speech by Senator Grassley defending ethanol tax credits. That’s not news. What is interesting is the reaction in the comments to the post. The 12 comments all rip the Senator’s defense of ethanol. The first one:

It

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Then maybe we shouldn’t have an ethanol industry

Wednesday, October 6th, 2010 by Joe Kristan

Senator Grassley:

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‘Bipartisan’ means they’re ganging up on you

Tuesday, March 30th, 2010 by Joe Kristan

Iowans Praise Bipartisan Support for Extension of Ethanol Tax Credit

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Don’t give them any ideas

Friday, March 12th, 2010 by Joe Kristan

Subsidize them and they will come:

Sen. Herman Quirmbach, D-Ames, an Iowa State University economics professor, said he sees no way to fix the film tax credit under a suspension that would make it pay.

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Make them buy my stuff!

Wednesday, February 10th, 2010 by Joe Kristan

Ethanol factories everywhere are struggling. So maybe we should stop building them?
Nah. Legislative supergenius Jack Kibbe has a better idea: make it illegal to not buy ethanol. He proposes a requirement that all gasoline sold in Iowa for vehicles contain at least 10% ethanol.

Kibbie, who also has sponsored a bill that would require all diesel fuel in Iowa contain at least 5 per cent biodiesel, said “Iowans should be proud of their renewable fuels industry,”

I’d be more proud if I didn’t have to subsidize it. Now will Mr. Kibbe extend this to every struggling Iowa industry? I hear the filmmakers are struggling. Let’s require all films and DVDs sold in Iowa to have a 10% Iowa content. Tourism isn’t doing well? All vacations must be spent 10% in Iowa destinations. You dumb people wouldn’t support your fellow Iowans otherwise!
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Not buying our stuff should be a crime!

Tuesday, January 26th, 2010 by Joe Kristan

Industry: Make all gas in Iowa contain ethanol

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So how’s that Ethanol Economy thing coming along?

Friday, May 22nd, 2009 by Joe Kristan

Roger McEowen:

Times continue to be tough for the ethanol industry. Gasoline demand continues to fall and corn prices remain relatively high. In April, Aventine Renewable Energy Holdings, an Illinois-based ethanol producer, filed for Chapter 11 (reorganization) bankruptcy, and the largest West Coast ethanol producer, Pacific Ethanol, Inc., filed Chapter 11 on May 18.

Des Moines Register: Iowa farm values drop another 7%
Oh, and Ethanol Bankruptcies Continue Apace.
It’s an economic development bonanza!
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Hiding cash in the Caymans, I can see. But Oskaloosa?

Friday, May 1st, 2009 by Joe Kristan

There’s no understanding the criminal mind sometimes.
Bismarck, North Dakota man embezzled millions from his employer. Then what does he do with it? The Jamestown Sun reports:

Glasser allegedly invested about $1 million in embezzled funds in a Wyoming ethanol project, and as much as $300,000 in a Richardton ethanol plant. He also bought real estate in Bismarck and Oskaloosa, Iowa, using stolen funds, court documents show.

Blowing other people’s money on doomed energy boondoggles? Who does he think he is, the Iowa Office of Energy Independence?

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On the proper uses of ethanol

Monday, April 27th, 2009 by Joe Kristan

Tax Vox speaks truth to corn power:

Big tax subsidies to encourage production of ethanol have helped yield two results: They have contributed to an increase of as much as 15 percent in the cost of food, and they have produced no measurable reduction in auto-related greenhouse gas emissions. Oops.
So says CBO in a nice new paper. Senator Chuck Grassley (R-Iowa) and other supporters of these incentives would vehemently disagree, but this is a tax boondoggle as high as an elephant’s eye.

20090427-1.jpg
Flickr photo via Dan4th under Creative Commons license
Read the whole thing, and remember: the worst use you can make of corn alcohol is to burn it.

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When government subsidies strike!

Monday, March 9th, 2009 by Joe Kristan

Will Wilkinson speaks the truth from Iowa City on the effects of government “investment” in the ethanol industry:

How much money has been sunk into this? Lots. That

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So much for economic development via ethanol

Monday, December 22nd, 2008 by Joe Kristan

From today’s Des Moines Register:

Ethanol producers now know that when corn prices fall, the prices of crude oil and ethanol decline as well. So ethanol producers’ gains on the cost side will be checkmated by losses on the revenue side.
The result has been the bankruptcy and closing of three of Iowa’s 32 ethanol plants.

Gee, an ethanol bubble, popped? Who’d have ever guessed?

Meanwhile, the sudden demand for corn for ethanol, driven by misguided tax breaks, is distorting grain markets and causing problems for livestock producers and other traditional corn users. These are users Iowa will want to still have around once the shiny new corn ethanol plants are shuttered in 10 years or so.

Aren’t you glad the Iowa pours your tax dollars into building more ethanol plants? But rather than cutting corporate welfare, the Governor is instead cutting spending on healthcare and education. You have to have priorities…

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A FARM BILL FULL OF MOONSHINE CREDITS

Thursday, October 4th, 2007 by Joe Kristan

SEE UPDATE AT BOTTOM
The Senate Finance Committee is drafting a new farm tax bill. If you were expecting a measure to simplify taxes and limit government meddling in the farm economy, you haven’t been paying attention.
The bill creates or extends at least 16 farm-related tax breaks. Brand new farm subsidies would include:
- A new credit for “endangered species recovery expenditures.”
- A new tax credit for CRP farmland.
- A new tax credit for conservation easements.
The bill also extends existing moonshine and pork ethanol and biodiesel tax credits, even in the face of high corn prices and an ethanol glut. It also exempts farmers receiving conservation reserve payments from self-employment tax, reversing a controversial proposed revenue ruling issued last year.
To pay for these, the bill adds some complication to the tax law.
- It limits deductions for farm losses to $200,000 for taxpayers receiving farm subsidies.
- It blocks Section 1031 “like-kind” exchanges for ground for which the owner is receiving ag program payments or CCC loans if the property is exchanged for improved real estate, unless the property is permanently retired from farm program payments.
It seems like it would make a lot more sense to not subsidize prosperous farmers through ag program payments at all, rather than nibbling at the subsidies through obscure and complicated tax provisions. Then again, I’m just a city boy, so maybe I’m missing something.
UPDATE: It looks as though the Senate is going to use this bill to codify the “economic substance doctrine.” This is a rule applied in the courts against transactions that follow the tax code superficially, but subvert it in reality. The Wall Street Journal covers this angle.

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