July 11, 2010
Give It Back—A Plea for Corporate Patriotism
In 2009, International Paper Company reaped the mother lode from U.S. taxpayers. As an unintended result of an expansion of the Energy Bill, the black liquor tax credit netted the company a total of $2.06 billion in cash from the coffers of the Treasury Department. And how did the grateful corporate executives thank us for the windfall? They shuttered three U.S. plants and put 1600 U.S. citizens out of work. The closures themselves might have been forgivable, given the tough year that paper manufacturers had endured, except that the same products that were produced at these mills will now be made at IP’s plants in Brazil and China. This proud American corporation should be compelled to return whatever portion of the tax credit was earned at the mills that it closed, as a penalty for sacrificing U.S. jobs to its own interests outside of the country.
The fact that these credits were issued in the first place is absurd. Black liquor is a by-product of cooking wood chips, which is the first step in the papermaking process. Because of its combustible properties, it is used as fuel in recovery boilers, which produce steam and electricity for the plant. The practice of recovering and burning this substance is age-old and has benefitted the industry in two ways—by eliminating the cost for disposal of a hazardous material, and by providing free fuel for power and steam generation. In order to qualify for the tax credit, diesel fuel was added to the black liquor to create a mixture that contained a high percentage of biofuel (the black liquor) and a small percentage of fossil fuel (the diesel). Thus, a government incentive that was designed to encourage the production of alternative fuels, while lowering the consumption of fossil fuels, was paid to an industry that actually increased its use of diesel while utilizing a biofuel that had...