Committee for a Responsible Federal Budget

Senate Votes to Cut Spending in the Tax Code

Jun 17, 2011 | Taxes

For anyone who is interested in seeing tax subsidies cleaned up, there's a bit of good news for you. The Senate voted yesterday to eliminate a $5.4 billion per year ethanol tax credit by a tally of 73-27. The vote came on an amendment to the economic development bill that is making its way through the Congress.

This vote is the culmination of a four-month back-and-forth between Sen. Tom Coburn (R-OK) and Americans for Tax Reform president Grover Norquist. In February, the (at the time) three Republican members of the Gang of Six--Coburn, Sen. Mike Crapo (R-ID), and Sen. Saxby Chambliss (R-GA)--sent a letter to Grover Norquist saying that cutting spending in the tax code should not be a violation of ATR's anti-tax pledge. This was in response to a Norquist letter arguing the opposite.

Ethanol came into the picture in late March when Sen. Coburn attempted to end the tax credit for ethanol that was voted on yesterday. Once again, Grover Norquist stated that voting for this amendment would violate his tax pledge unless it was offset with other tax cuts. And once again, Sen. Coburn shot back with a letter criticizing Norquist's position, saying that "you are defending wasteful spending and a de-facto tax increase on every American."

The tension among conservatives over whether to defend tax expenditures has been great in the past few months, with observers wondering whether Republicans in Congress would support cutting them or side with Norquist and the no-new-taxes pledge. In this case, Senate Republicans have overwhelmingly sided with the former group, recognizing that tax expenditures are merely spending through the tax code. This opens the door to meaningful tax reform that could be part of a budget deal, and that is all around great news.