Wednesday, June 1, 2011

Black Liquor Makes the Top Ten

A USA TODAY editorial yesterday ranked black liquor tax credits #6 on the list of “10 terrible tax breaks” that should be eliminated or scaled back.

"'Black liquor' = much green," the unsigned editorial said. "Paper companies make a mockery of tax law by claiming a credit meant to promote biofuels. They take a flammable byproduct of the pulping process known as black liquor, mix it with diesel fuel and — presto! — they are promoting alternative fuels and eligible for massive tax breaks. (Cost: $6.6 billion.)"

After many months of crusading to bring to light this boondoggle for a pulp byproduct, I'm happy that in less than a month a second major newspaper has taken notice -- especially because it cited the $6.6 billion figure that was first reported by Dead Tree Edition.

But it's too bad the USA TODAY editorial got only half the story. The $6.6 billion number (originally reported as $6.5 billion, but then the IRS kicked in a sweetener) represents only what publicly traded pulp manufacturers earned from alternative fuel mixture tax credits.

It doesn't include money paid to privately held pulp makers, which the United Steelworkers claims was $5 billion for Georgia-Pacific alone. And it doesn't include another biofuel boondoggle nicknamed Son of Black Liquor, which will end up costing taxpayers at least $1 billion and perhaps far more.

The editorial doesn't mention that it's too late to do anything about the fuel-mixture credits. That money has already been paid out to pulp companies before black liquor was declared ineligible for the program. But the Son of Black Liquor credits are likely to be claimed for several more years.

The other newspaper that has come out recently against black liquor tax credits was The Washington Post, which referred to Son of Black Liquor as "a paper subsidy that must be stopped". It noted that "tax credits for black liquor . . . served no energy policy purposes and increased the federal debt to boot."

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