Clean Tech Taxcess Tracker
Your update on Energy Tax Incentives
Date: December 15, 2011
The Senate Finance Energy, Natural Resources, and Infrastructure Subcommittee convened a hearing December 14 titled “Alternative Energy Tax Incentives: The effect of short-term extensions on alternative technology investment, domestic manufacturing and jobs.” Testimony from the panelists centered on the temporary nature of the tax code and the need for long-term predictability to help improve and invest in alternative energy. Questions from committee members, including Infrastructure Subcommittee Ranking Member Sen. John Cornyn, R-Texas, suggested support among the panelists for a long-term solution for alternative energy incentives, but also, given decreasing tax revenue, a need “to evaluate energy tax policy based on the value to the taxpayer.” According to Subcommittee Chairman Jeff Bingaman, D-N.M., lawmakers are considering how to address ten expiring energy tax provisions before the end of 2011 and five scheduled to expire after 2012.
Legislative Outlook- It is possible that Senate Democrats may try to attach a package of expiring tax provisions, including numerous energy provisions such as the biodiesel tax credit, production tax credit, and Treasury 1603 grant program, to payroll tax relief legislation within the next few days. However, we believe that it is unlikely that expiring tax provisions will be extended before the end of 2011. As it has done in the past, Congress is more likely to consider expired tax provisions next year on a retroactive basis. This sentiment was also reflected in recent discussions among House Ways and Means Committee majority staff.
The Treasury’s 1603 grant program may face extra scrutiny when discussions of expired tax provisions occurs, given its stimulus (ARRA, P.L. 111-5) origin. Leading up to the negotiations for last December’s tax act, Republicans generally opposed extending any stimulus provisions. Exceptions were made, but this sentiment highlights the Republican concern that ARRA provisions become permanent. Senate Finance Committee ranking member Orrin Hatch, R-Utah, made such a statement early this Congress when thinking back to December’s tax act.
It is possible that the 1603 grant program is extended retroactively along with the other temporary energy tax provisions in 2012, but the package of expiring tax provisions may go through heightened scrutiny during the process.
Follow this link for helpful background testimony from Dr. Molly Sherlock of the Congressional Research Service (CRS) who testified in front of the Finance Subcommittee on December 14.