The Senate finance committee will be holding a markup hearing on expired tax subsidies members want to be revived for their constituents and campaign supporters, and this includes now defunct subsidies for green energy.
A document released by the Joint Committee on Taxation last week details dozens of expired tax credits, including a number green energy tax credits for things like wind energy production, making biofuels and using electric vehicles.
“This markup will give the Committee a timely opportunity to act on extending a number of expired provisions in the tax code that help families, individuals and small businesses,” Sen. Orrin Hatch, the Utah Republican who chairs the finance committee, said in a statement.
Democrats and Republicans seem to be working together to retroactively hand out tax credits to green energy producers. Among the most contentious of the green tax subsidies is a proposal to pay companies that produce energy from wind turbines.
The so-called Wind Production Tax Credit was allowed to expire at the end of last year, but a fierce effort by wind state Republicans and Democrats who want to see the energy source once again be given taxpayer support.
While most Republicans actually oppose many of these green energy subsidies, a few have embraced them as essential to their state’s economy. In fact, it was Iowa Republican Sen. Chuck Grassley who got wind and biofuel subsidies into the pending tax package. Grassley wrote the finance committee earlier this month, urging them to include wind subsidies in the tax extenders deal.
Grassley’s green subsidies would pay wind producers 2.3 cents per kilowatt hour over ten years for all the electricity they generate or allow wind farm operators to take a 30 percent investment tax credit instead of the power payments. Grassley also pushed for a $1.01 per gallon tax credit for cellulosic biofuel producers and a $1 credit for biodiesel makers.
“Certainty and predictability in tax policy are both important for retaining and creating jobs,” Grassley said in a statement. “The energy items not only help support jobs. They also support the renewable energy that consumers want for a cleaner environment and energy independence.”
Iow benefits from both wind energy and biofuel subsidies. The state ha the third largest installed wind power capacity in the country in 2012 and was the first state to get more than 20 percent of its power from wind. For biofuels, some 43 percent of the state’s corn crop goes towards ethanol production. Iowa also produces lots of biodiesel and biofuel fuels from ethanol.
Taken together, these subsidies would cost the government at least $13 billion in forgone revenue over ten years, according to finance committee estimates. The first wind tax subsidies were passed in 1992 with Grassley’s help.
It’s unclear if the tax extenders package will clear both the Senate and the House because of staunch Republican opposition to green energy subsidies, but the dozens of other tax provisions in the Senate package could be used to grease the wheels, so to speak, for a deal to happen.
“This is the first time in 20 years where a new Congress has started with extenders legislation having already expired, and given that these provisions are meant to be incentives, we need to advance a package as soon as possible,” he said.
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