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Politics : Actual left/right wing discussion
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To: Ish who wrote (2257)10/3/2006 7:48:36 PM
From: TimF  Read Replies (1) of 10087
 
I said "As for not being taxed I wouldn't really call that a subsidy."

So how does that sound like Ted Kennedy?

OTOH if you tax some one fuel and don't tax its competitor, than you are distorting the competitive balance.

The 51 cent subsidy is just that a direct subsidy. The tax advantage is an additional competitive advantage created by the federal government for ethanol. Its probably a competitive advantage I could live with as long as the equivalent sized direct subsidy eventually goes away.

To clarify the subsidy is per gallon of ethanol used in gasoline, not per gallon of end product. Since the end product is typical 90% gasoline the subsidy per gallon of gasohol is only about 5.1 cents per gallon. You get about another 5 cents per gallon benefit on the fact that the ethanol part of the final mix isn't taxed. 10 cents per gallon is a noticeable subsidy but not a truly massive one. I don't have the data to calculate how much of the normal agricultural subsidies go to benefit ethanol used for fuel, but any benefit would be in addition to the approx. 10 cents per gallon of competitive benefit that ethanol already receives.

One disadvantage the government imposes on ethanol is import barriers. These are an advantage to the corn growers, but they serve to make ethanol more expensive. I'd like to see these barriers removed as well as the direct subsidy.
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