Koch brothers oppose their own tax subsidies

The Koch brothers have taken a public stance against ethanol subsidies that promote Iowa corn-based ethanol over Brazilian sugar-based ethanol, which they say is cheaper and safer for the environment. Koch Industries sent this letter to Senator Tom Coburn:

June 13, 2011 Senator Tom Coburn 172 Russell Senate Office Building Washington, DC 20510

Dear Senator Coburn,

Koch Industries has opposed federal mandates and subsidies for decades. Our aim is to create a free market where consumers decide winners and losers based on which products they decide to buy, instead of government picking winners and losers based on which friends or products it chooses to subsidize.

One such government intervention is the tax credit that provides about $6 billion each year to blenders of ethanol. Lawmakers in the Senate could take a sensible step by approving an amendment sponsored by Senator Tom Coburn (R-OK.) that would eliminate this credit. We hold this position despite the fact that we benefit from these tax credits.

We oppose ethanol subsidies because they distort economic signals about price and demand and create inefficiencies that divert resources from productive activities to politically favored ones. We have also opposed subsidies for natural gas vehicles and other biofuels for these same reasons.

Still, our company now produces and blends ethanol, because while we would prefer that there be no government mandates or subsidies, once such laws are in place we will comply with them. We will not place our company or our employees at a competitive disadvantage in the mixed-market economy in which we compete.

Our government and public affairs activities are based on principles of economic freedom and property rights that are core values recognized and held by the majority of Americans. Koch will continue to lobby for the repeal of energy subsidies and mandates. We will work to transform the current, mixed-market economy into a true free-market economy.


Philip Ellender

President and COO Public Affairs

Koch Companies Public Sector, LLC

Given the importance of corn-based ethanol to the economic welfare of the state of Iowa, it will be interesting to see where the presidential candidates fall on this issue. Jon Huntsman has bypassed Iowa as a campaigning ground altogether because of his stance on this issue.

Will Mitt Romney support the continued ethanol subsidies that greatly benefit Iowans, or will he start his campaign by shunning the key state?

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