Representative Ann Kirkpatrick, from the 1st District of Arizona, has introduced a bill to close the "black liquor loophole" costing taxpayers billions of dollars. Since early this year paper companies have been raking in billions of dollars by claiming 50 cents/gallon of "black liquor," a partly organic, mostly solid sludge created in the chemical pulping process, and which is burned to help power their mills which use virgin wood fiber.
The goof by Congress picked up on by paper companies has resulted in a and a trade war between the US and Canada (WSJ calls it the "Black Liquor War") and is driving out recycled papermaking jobs. This bill intends to level the playing field and help save recycled paper mills and support their workers.
The release says:
"In addition to costing taxpayers billions, the credit creates an uneven playing field by placing companies that make recycled paper at a competitive disadvantage, because their process does not produce black liquor. Closing the loophole will save recycled paper mills and keep employees in those mills working."
Since 2006, Catalyst's mill in Snowflake, Arizona has been forced to lay off more than one hundred people – about one-quarter of its workforce. The mill is a leading employer in Navajo County, and a shutdown would leave its 324 remaining workers unemployed.
Rep. Kirkpatrick’s legislation would close the tax loophole as soon as the bill is signed into law. Ending the tax break as late as October 1 would save taxpayers an estimated $750 million this year. But with jobs in her district at risk and our budget deficit growing steadily, Rep. Kirkpatrick intends to stop the subsidy as soon as possible.
Rep. Jeff Flake (R-Mesa, Arizona), a noted advocate for fiscal responsibility, is an original co-sponsor for the bill.
“The federal government shouldn’t be picking winners and losers in the economy, and that’s precisely what the black liquor tax credit loophole has done,” said Rep. Flake. “It has put some paper mills at a disadvantage, has complicated our trade obligations with Canada, and has been an enormous waste of federal money. The black liquor tax credit needs to be repealed immediately.”
Read the whole press release here.