Paper industry pushed further into the black by ‘black liquor’ tax credits
Want to really cut subsidies and really help the environment? Here’s a good place to start. Burning hydrocarbons is not good for the environment or your health. Encouraging burning of hydrocarbons with Federal Subsidies is nuts. There are a few exceptions to that, but this one doesn’t work.
Talk about paper profits.
The paper industry — which in 2009 raked in billions of dollars in federal subsidies originally intended to promote alternative highway fuels — is now using a different biofuel tax credit to cut its tax bills for 2010 and beyond by hundreds of millions of dollars more.
The heart of the issue is the tax treatment of a substance called “black liquor,” a byproduct of the wood-pulping process at paper mills. The companies have burned black liquor to generate power since the 1930s.
It was not the intent of Congress to reward that behavior, but the industry and its accountants persuaded the Internal Revenue Service to allow black liquor to count as an alternative fuel in 2009. Under that program, the paper industry received more federal money than almost any industry outside the auto sector.