Clean sources of energy would lose, and polluting fuels would win, under the House Republicans' tax plan.
Thank goodness for the Senate.
I'm not sure when opposition to clean energy, improved efficiency and pollution became hallmarks of conservatism, but House Republicans are definitely doing everything possible to protect coal and nuclear energy at the expense of natural gas and renewable sources. Some politicians seem to think conservatism is only about conserving the status quo.
Frequent readers of this column know that I am no fan of government interference in markets. Lawmakers should reserve such measures for protecting national security or to correct market failures.
For example, I want the government to enforce the "polluter pays principle," which says no one should generate profits by polluting common resources like air, water or public lands. I oppose efforts to pick winners and losers using the tax code.
A different type of economics, though, operates in Washington. Industry lobbyists and the wealthy have used cash to influence lawmakers since the Tariff of 1816, when Congress first used tax policy to boost American businesses. The nuclear, coal and oil industries demonstrated their power in the House this summer with the first draft of the Tax Cuts and Jobs Act.
The biggest surprise is their attempt to blow up a deal that Republican Sen. Charles Grassley crafted in 2015 to predictably phase out tax credits for wind and solar energy. Hundreds of investors and companies, including my wife's, have negotiated billions of dollars in projects based on the expectation that the tax credits would end in 2020.
The Republican proposal, though, moves the goal posts, cutting the 2.3-cent-per-kilowatt-hour tax credit to 1.5 cents and retroactively changing the definition of "under construction." The plan would throw $5 billion in wind projects and thousands of jobs out the window, the American Wind Energy Association reports.
Grassley and three other Republican senators have promised to kill any changes to the production tax credit, and the Senate bill leaves them alone. Lawmakers will hammer out a final version in conference committee.
GOP leaders, meanwhile, would extend $6 billion in tax credits for the nuclear power industry. Those credits are necessary to complete the Vogtle nuclear power plant's units 3 and 4, the only new reactors under construction in the United States. Southern Co. needs the extension because the reactors are years behind schedule and billions of dollars over budget.
This is a clear case of Congress bailing out a project that many experts believe is too expensive and unnecessary. Natural gas power plants could generate just as much power at a fraction of the cost, but because much of the Southeast remains a regulated market, public utilities commissions can force consumers to pay the higher price.
Republicans would also eliminate a $7,500 tax credit for purchasing an electric vehicle, something that I plan to collect after purchasing a Chevy Bolt this year. Congress created the tax credit to encourage U.S. automakers to become global leaders in electric vehicles and to make early models affordable for the average American.
The tax credits, by the way, end after the 200,000th edition of a model is sold, so again, the credit automatically phases out as the technology becomes standard.
The oil and gas industry, meanwhile, gets to keep the intangible drilling cost deduction, which allows for accelerated deduction of drilling costs and special accounting rules known as "last-in first-out." This deduction allows oil stockpiles and other inventories to be valued at the most recent price when calculating profit and taxable revenue.
This deduction is a huge subsidy for the industry, which says it would die without it. Yet it is exactly the kind of loophole that the Republican majority in both chambers promised to eliminate in return for lowering the corporate tax rate. Oil and gas gets to have their taxpayer cake and eat it, too.
Congress is leaving untouched other oil and gas tax advantages, such as the depletion allowance for small producers. Owners of working interests in a well will also continue to report any income or loss as active, rather than passive.
The proposed tax bill also fails to impose a carbon tax, another huge advantage for coal, oil and gas producers who profit from products that change the climate. A new report by 13 federal agencies just reaffirmed that man-made carbon dioxide emissions are warming the planet, leading to higher sea levels, more powerful storms and fiercer wildfires.
Congress intends to allow carbon-emitting industries to continue to pollute freely, while leaving taxpayers to pay for the damage caused by climate change. Carbon-free sources of energy, meanwhile, get no reward for their cleanliness.
None of this is a surprise to GOP supporters, who generally support this agenda. But the rest of us should recognize that Congress' tax plan is picking winners and losers, and the taxpayer is left picking up the check....Read more