Is ending a bad program a tax increase?

Senator Tom Coburn, who represents my natal state of Oklahoma, is probably the biggest deficit hawk in Congress.  He’s a deficit eagle, as fiscally responsible and economically conservative as they come.  But he’s taking flack from conservative activist Grover Norquist and others for violating the no new taxes pledge that most Republican lawmakers have taken.  Why?  Because Sen. Coburn is spearheading an effort to drop ethanol subsidies, which include a tax credit for that industry.

Most conservatives consider the ethanol subsidies to be a huge waste of money, an outdated concession to environmentalists, though farmers like that industry because it buys up so much of the corn crop, sending prices sky-high.  It sends the price for other commodities sky high too, since many farmers are cutting back the production of wheat and other crops in order to plant more corn, which cuts the supply of those other commodities.  But liberals also consider them a waste of money, a payoff to big corporations.  And there is a consensus that the subsidies cause actual harm to poor countries, since turning food into fuel and the consequent high food prices means more hunger for the poorest of the poor.  And even environmentalists now oppose the ethanol option, since it burns more fossil fuels to produce it–all of those tractors in cornfields–than it replaces.  And in this time of economic travail and crippling federal deficits, the subsidies are costing taxpayers $6 billion per year.

So why not kill the beast?  Because part of the subsidy is in the form of a tax credit, so repealing it would be a tax increase, and 95% of Republican lawmakers have promised not to vote for a tax increase.

See Coburn prompts Senate vote on ethanol subsidies – The Washington Post.

Once again, in politics as in religion,  we see the spirit of legalism, which violates the spirit of the law in order to keep the letter.

Can common sense be restored to our government?  Can this country even be governed in today’s political climate?

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Eric Brown

    Removing a faulty tax credit is not an increase. A credit is a temporary effort to shape behavior. That’s all. This is probably lobbying at its worst.

  • Eric Brown

    Removing a faulty tax credit is not an increase. A credit is a temporary effort to shape behavior. That’s all. This is probably lobbying at its worst.

  • Jonathan

    I don’t like ethanol in my petrol. My vehicles get worse gas mileage with ethanol. I would be happy if it were optional and not force you to use it.

  • Jonathan

    I don’t like ethanol in my petrol. My vehicles get worse gas mileage with ethanol. I would be happy if it were optional and not force you to use it.

  • Cincinnatus

    Political posturing. Republicans are the ones currently trumpeting a simplified corporate tax code that would eliminate all loopholes. This is why I can’t stand politics: so much duplicity, so much rhetoric, so much meaningless diction.

    And I haven’t even noted the numerous problems with ethanol.

  • Cincinnatus

    Political posturing. Republicans are the ones currently trumpeting a simplified corporate tax code that would eliminate all loopholes. This is why I can’t stand politics: so much duplicity, so much rhetoric, so much meaningless diction.

    And I haven’t even noted the numerous problems with ethanol.

  • Cincinnatus

    Also, this is the same rhetorical tactic employed by Democrats who claim that lowering a tax is “increasing spending” or that instituting a credit is “giving government money” to a person or corporation.

  • Cincinnatus

    Also, this is the same rhetorical tactic employed by Democrats who claim that lowering a tax is “increasing spending” or that instituting a credit is “giving government money” to a person or corporation.

  • DonS

    It is easy enough to get rid of tax subsidies and credits in favor of lowering overall tax rates for everyone, so that the tax system is fairer, less political, and much simpler. That is what should be proposed and supported by Republicans.

  • DonS

    It is easy enough to get rid of tax subsidies and credits in favor of lowering overall tax rates for everyone, so that the tax system is fairer, less political, and much simpler. That is what should be proposed and supported by Republicans.

  • fws

    dons @ 5

    I fully agree. but since there is not political will in either party to do this, why not push for eliminating as many subsidies, tax credits and deductions as possible?

    yes this is a tax increase in a sense.
    no it is not that the govt is giving you money by giving you a credit or subsidy, the money IS yours… but…

    can we just consider that it is really bad policy to use the tax code to try to manipulate the economy in the form of incentives? so why not try to do that if we cant have the whole loaf?

    can we agree that republicans are against it because basically they would lose farm state votes they desparately count on?

  • fws

    dons @ 5

    I fully agree. but since there is not political will in either party to do this, why not push for eliminating as many subsidies, tax credits and deductions as possible?

    yes this is a tax increase in a sense.
    no it is not that the govt is giving you money by giving you a credit or subsidy, the money IS yours… but…

    can we just consider that it is really bad policy to use the tax code to try to manipulate the economy in the form of incentives? so why not try to do that if we cant have the whole loaf?

    can we agree that republicans are against it because basically they would lose farm state votes they desparately count on?

  • Cincinnatus

    fws: Yes.

  • Cincinnatus

    fws: Yes.

  • fws

    I read some article that asserted that norquist came up with his ideas at age 14 and considers the no tax thing as sort of a form of “branding” (ie marketing) for the republicans. as in republican=no taxes, or republicans=slash taxes.

    this seems unwise. what is not to like about paying less taxes?! But if we spent too much, and we are ALL guilty of our part of supporting the bloated budget, wouldnt it make sense to increase taxes until there is a political will to cut spending? and then maybe people would “get” it?

    or just maybe do both? cut spending and raise taxes? But then EVERYONE would scream wouldnt they?

    so shouldnt we be open to considering what is politically viable? which would mean reps and dems meeting, behind closed doors, to come up with a reasonable compromise that is noxious to both sides but would actually be rational? and that would mean no “no tax ” pledge…….

  • fws

    I read some article that asserted that norquist came up with his ideas at age 14 and considers the no tax thing as sort of a form of “branding” (ie marketing) for the republicans. as in republican=no taxes, or republicans=slash taxes.

    this seems unwise. what is not to like about paying less taxes?! But if we spent too much, and we are ALL guilty of our part of supporting the bloated budget, wouldnt it make sense to increase taxes until there is a political will to cut spending? and then maybe people would “get” it?

    or just maybe do both? cut spending and raise taxes? But then EVERYONE would scream wouldnt they?

    so shouldnt we be open to considering what is politically viable? which would mean reps and dems meeting, behind closed doors, to come up with a reasonable compromise that is noxious to both sides but would actually be rational? and that would mean no “no tax ” pledge…….

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “or just maybe do both? cut spending and raise taxes? But then EVERYONE would scream wouldnt they?”

    Most babes cry at weaning.

    It still has to be done.

    We need to grow up.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “or just maybe do both? cut spending and raise taxes? But then EVERYONE would scream wouldnt they?”

    Most babes cry at weaning.

    It still has to be done.

    We need to grow up.


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