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Will a tax deal leave out ethanol credits?

As behind-the-scenes negotiations of the fate of Bush-era
tax cuts continue, one senator who supports keeping a tax credit for ethanol
said Thursday that he’s not certain of its fate.

Senator Tom Harkin, a liberal Democrat from Iowa who says
he’s willing to battle GOP efforts to maintain tax breaks for the wealthiest
Americans on Christmas day if necessary, said he doesn’t know what will happen
to another tax break that’s scheduled to expire at the end of this month, the
45¢ per gallon tax credit for ethanol.

“All I can say is I’m going to fight hard for it,” Harkin

The Volumetric Ethanol Excise Tax Credit (VEETC) has come
under widely publicized attack this week.

On Monday a letter calling for the end of VEETC went to
congressional leaders from a coalition of interest groups that spans the right
and the left of the political spectrum ( and FreedomWorks, which
backs the Tea Party).

“At a time of spiraling deficits, we do not believe
Congress should continue subsidizing gasoline refiners for something that they
are already required to do by the Renewable Fuels Standard,” said the group,
which also includes The American Meat Institute, Public Citizen, the National
Catholic Rural Life Conference, and the Grocery Manufacturers Association.

That was followed a day later by a letter to the Senate
leadership, Harry Reid (D-NV) and Mitch McConnell (R-KY) from 17 senators led
by Dianne Feinstein (D-CA) and Jon Kyl (R-CA) urging them to allow VEETC and
the tariff on imported ethanol to expire. The group contends that the ethanol
tax credit will cost the Federal Treasury $31 billion over the next five years.

Senators Harkin and Chuck Grassley (R-IA) are among 15
who have written Reid and McConnell urging them to keep it. They argue that
ending the tax credit would cost more in lost jobs, higher fuel prices and
imported petroleum.

Harkin said that all of the tax issues, including estate
taxes and tax rates for individuals, will likely be part of an omnibus bill
that originates in the House Ways and Means Committee. But, he said, an
agreement will be negotiated by the Obama Administration and Democratic and
Republican leaders of Congress before anything comes up for a vote.

Among those negotiators is Max Baucus, the Montana
Democrat who heads the Senate Finance Committee.

“Baucus, he’s supportive of it,” Harkin said when asked
about who among the negotiators is backing an extension of VEETC. “We’ve got
good bipartisan support, but not everyone is on Senate Finance.”

According to The New York Times, McConnell has bypassed
Grassley, the ranking Republican on the Finance Committee and appointed Kyl to
represent the Senate GOP in negotiations over tax legislation in this month’s
lame duck session of Congress.

Also, the House Ways and Means Committee that’s still
controlled by Democrats has called for a 20% cut in the size of the ethanol tax







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