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Congress Continues to Stall on Renewable Energy Tax Credits
By:
TraderMark
Tuesday, September 02, 2008 12:37 PM
Symbols:
NCI
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There's a pretty clear history that these projects are less likely to go forward without a credit," he said.
Congress let the credit expire in 2000, 2002 and 2004
.
In those three years, wind capacity installation dropped 93 percent, 73 percent and 77 percent, respectively, from the previous year
.
Navigant Consulting, which advises on renewable energy technology, estimated that
investments in wind and solar power in 2009 would amount to $26.6 billion with the credits; that would fall to $7 billion without them
.
The
credits are expected to total $334 million
, according to congressional estimates.
GOP lawmakers are protesting efforts to offset the costs with other taxes or other items attached to the proposals. In the House, conservative Democrats promise to block any extension that adds to the deficit.
On a related issue and more to the "big picture" of global competition
The
biggest concern for high-tech companies and manufacturers is the research and development credit
, which expired at the end of last year.
The credit has been allowed to expire 13 times since it was adopted in 1981
.
One repercussion
, said Monica McGuire, executive secretary of the R&D Credit Coalition,
is that more companies are taking their research dollars overseas
.
"
It's a global race for R&D dollars
," she said, and
the odds are not good when at least 20 developed nations offer tax incentives and the United States currently has nothing
.
So you see how our leadership is literally undercutting the country at it's knees, especially in this newly flat world where capital will flow where it is treated best.
Last, why are there dates on tax breaks at all? Ah, I'm glad you ask - another way to hide our true structural deficits you see... rarely is a tax break given, retracted - so when the bill is sold we are told about the "limited" effect on the long term debt. Then X years later when its time for renewal most of these giveaways are extended (except apparently the renewable energy tax credits) it can add to our debt load without fanfare. In the end, giving away the store is a lot more popular political move (promise people everything) than fiscal responsibility (acting like an adult)
Putting expiration dates on tax breaks is a useful budget gimmick
for lawmakers seeking to mask the growing federal budget deficit.
Because they are set to expire at a certain date by law, they do not count as revenue losses after that date even though most people assume Congress eventually will act to extend them
.
The Bush tax cuts of 2001 and 2003 are the biggest extenders of all in this respect. Trillions of dollars will be added to the federal debt if Congress chooses to make them permanent
after they are set to expire in 2010.
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