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Study: Wind subsidies cost non-wind states hundreds of millions

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Michael Bastasch DCNF Managing Editor
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As the deadline for Congress to extend federal tax credits for wind energy production fast approaches, a new study finds the subsidies amount to wealth transfers from taxpayers in non-wind states to the tune of hundreds of millions of dollars.

“According to our calculations, taxpayers in 30 states and the District of Columbia paid more to the federal government in 2012 to support wind subsidies than wind producers in those states received,” according to the free-market Institute for Energy Research

“Of those 30 net losing states, 11 states and the District of Columbia had no wind production and received zero subsidies but still paid their share of the tax burden related to federal wind subsidies,” said IER , which opposes extending tax subsidies for wind energy.

The contentious Wind Production Tax Credit has also moved millions of dollars from states with struggling economies to states with booming economies.

For example, California suffered a net loss of more than $195 million from wind tax credits over the last ten years. The state currently has a high unemployment rate of 8.7 percent, according to the Bureau of Labor Statistics.

New York has seen a net loss of more than $162 million tax dollars from wind subsidies in the last decade and the state’s unemployment rate continues to remain relatively high at 7.7 percent. Florida, New Jersey and Ohio have lost more than $366 million combined in the last decade. All three of those states currently have unemployment rates of 6.7 percent and above.

States that were the largest beneficiaries of wind tax credits saw a net flow of hundreds of millions of dollars into their states to build wind farms. Texas has seen a net gain of more than $394 million in the last 10 years. The state if often cited for its high economic growth and its relatively low jobless rate of 6.2 percent.

North Dakota saw a net gain of more than $110 million and currently has the lowest unemployment rate in the country at 2.7 percent. Iowa and Oklahoma saw more than $415 million combined flow into their states thanks to generous wind subsidies.

The Wind Production Tax Credit was first enacted in 1992 and has since been extended seven times. At the end of this month, tax benefits to wind will blow away unless Congress opts to extend them again.

Conservative groups and lawmakers oppose the extension, arguing that 20 years of taxpayers funding is enough.

“The principal federal support for the wind energy industry is scheduled to expire at the end of this year,” reads a letter signed by 102 conservative groups to Members of Congress. “The undersigned organizations and the millions of Americans we represent stand opposed to extending the production tax credit (PTC).”

Kansas Republican Rep. Mike Pompeo has also ramped up efforts to block wind subsidies from being extended, building a coalition of 52 lawmakers to influence talks to reform the tax code to ax wind subsidies.

“As the House Ways and Means Committee takes on the commendable, but difficult, task of enacting revenue-neutral tax reform legislation, the PTC should be excluded from there or in any tax extenders legislation that the Committee may consider,” Pompeo and other lawmakers wrote in a letter to House Ways and Means Committee Chairman Dave Camp.

However, wind states and the industry have also been pressing lawmakers to extend the wind tax credits to save jobs and continue growing renewable energy generation to fight global warming.

“The nation’s wind industry developers do not need this tax credit forever, but they do need policy certainty in the near term to bring their costs to a fully competitive level,” write eleven state governors led by Oregon Democrat John Kitzhaber. “Please support our states in the pursuit of economic strength, energy diversity, and consumer savings, by acting quickly to adopt a responsible multi-year extension, even if it reduces in value over time, of the production tax credit.”

Lawmakers will have until December 31 of this year to extend wind tax credits and the current draft proposal for comprehensive tax reform put forward by Montana Democratic Sen. Max Baucus don’t give a recommendation on what to do with renewable energy tax credits extensions.

“[T]he ultimate takers are actually the owners of wind facilities — a very concentrated group –while the ultimate payers of the subsidies are all Americans who pay federal taxes,” the IER study adds. “The payments to the wind producers come at the expense of all taxpayers everywhere.”

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