$8 Billion

Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
http://www.thenation.com/doc/20090420/hayes
 Quote:
Thanks to an obscure tax provision, the United States government stands to pay out as much as $8 billion this year to the ten largest paper companies. And get this: even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry--handsomely--to use more fossil fuel. "Which is," as a Goldman Sachs report archly noted, the "opposite of what lawmakers likely had in mind when the tax credit was established."
 Quote:
On March 24 International Paper (IP) announced it had received its first check from the IRS for a one-month period this past fall. The total? A whopping $71.6 million. "It's probably close to a billion a year of cash," McClay said. "If you look at the economics of this business, to make that kind of money today you'd have to be on another planet." IP's stock rose 12 per-
cent on the news.
 Quote:
In fact, the money to be gained from exploiting the tax credit so dwarfs the money to be made in making paper--IP lost $452 million in the fourth quarter of 2008 alone--that the ultimate result of the credit will likely be to push paper prices down as mills churn at full capacity in order to grab as much money from the IRS as it can.
So we have a biofuel law actually increasing the amount of fossil fuels used...and at tax payer expense.
 
Joined
Sep 28, 2002
Messages
39,802
Location
Pottstown, PA
Sounds like during the Reagan administration ..when a bill was passed to spur domestic investment with tax credits. A steel company bought BP (or the other way around) at a whooping (fake numbers) 150M public subsidy. You gotta love it when a plan comes together.
 
Joined
Jul 11, 2008
Messages
1,478
Location
Iowa
So paper companies are over producing paper, which drives down the cost of paper to the point that they're losing money, but they actually end up making MORE money doing this by exploiting a tax subsidy loophole. If this keeps up, it will save newspapers from going out of business. The paper companies will end up paying them to take their newsprint. All at the low, low cost to you the taxpayer of $2,000,000,000 plus.
 
Joined
Aug 5, 2002
Messages
18,799
Location
Silicon Valley
You know, the better way to support bio fuel is to give these subsidizes without the blending requirement, and encourage these energy to be used more efficiently. Imagine if government sponsor black liquor storage and generator, and let the utility buy the electricity generated during peak hour, and sell back the electricity to the paper mill during non-peak hour, that'll be a win-win situation. At least it is only 1 calender year and it is keeping our valuable businesses alive.
 
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