4th Feb 2010

February 4, 2010

By Bill McInturf

The ethanol industry has been criticized for being dependent on government subsidies and requiring too many resources to produce. However, the financial facts speak for themselves. The Government’s 2008 $4.7 billion investment in the ethanol industry returned almost $20.0 billion in increased tax revenue and reduced farm program expenditures.

This has to be one of the most financially successful government investments ever.

The current generation corn-based ethanol is likely not the entire solution to the energy problem. However, a growing vigorous ethanol industry has been created that already provides a significant contribution to the United States budget and economy by providing jobs and displacing oil imports.

The Volumetric Ethanol Excise Tax Credit (VEETC) of $0.51 per gallon (now reduced to $0.45 per gallon) provided the United States a 5-to-1 return on investment in 2008 as follows:

 

Revenue (economic benefits):                                 

 

 

Federal income tax paid on increased

 

 

GDP and higher household income

$ 11.90

billion

 

Source: Contribution of the Ethanol Industry to the Economy of the United States

 

 

 

 

 

State and Local tax revenue paid on increased

 

 

GDP, higher household income and increased property taxes

$ 9.00

billion

 

Source: Contribution of the Ethanol Industry to the Economy of the United States

 

 

 

 

 

Reduction in Loan Deficiency Payments

$ 3.4  

billion

 

Source: Economic Contribution of the Partial Exemption

 

 

for Ethanol From the Federal Excise Tax on Motor Fuel

 

 

 

 

 

Total 2008 economic benefits

 $24.35 billion

 

 

 

 

 

Expense (federal tax credit):

 

 

 

Volumetric Ethanol Excise Tax Credit (VEETC)

 

 

 

and Small Producer Credit

$ 4.70

billion

 

Source: Contribution of the Ethanol Industry to the Economy of the United States

 

 

 

 

 

 

 

Net Economic Benefit of Ethanol tax credit

 

$ 19.65

billion

 

 

 

 

 

The renewable fuel industry provides American jobs and a less or non-polluting fuel. With increasing efficiencies each year, it is obvious that this industry has a bright future as it continues to mature.

About CFO Systems LLC

CFO Systems provides CFOs and Controllers to the Midwest on a contract basis. We specialize in offering proven financial leadership to our clients. Our leadership team has extensive experience and is able to implement solutions targeted specifically for each client’s needs. Companies working with CFO Systems enjoy the benefits of advanced expertise, while limiting the cost and commitment of senior staff. Our clients trust us to help lead them to the next level by providing quality financial leadership.

About Bill McInturf

Bill McInturf has 25 years experience of senior financial leadership primarily in the real estate industry.  He has participated in private fund raising, acquisitions, dispositions, acquisition financing, re-financing and mezzanine financing, the selection and implementation of two enterprise-wide computer systems; supporting rapid growth (both organic and acquisition) with process improvements that streamlined efficiencies; and managing budgeting and forecasting, cash management, audit, and tax return preparation.