The Wind Production Tax Credit lives on
After much negotiation, Congress has passed legislation retroactively extending 55 “temporary” tax breaks (or tax extenders) through the end of 2014. It is likely that the president will also approve this short-term measure. These tax breaks include a number of incentives for nonprofits, individuals and businesses.
While a number of these breaks may raise some eyebrows — such as the tax credits for NASCAR tracks, Puerto Rican rum makers and Kentucky Derby racehorse owners — there is one particular extension that blows the rest out of water: the Wind Production Tax Credit. The projected cost of another one-year extension is $6.1 billion dollars, which doesn’t count the increased electricity costs in states with the highest wind “productivity.”
While encouraging new energy sources is a noble objective, R Street has detailed on manyoccasions how poor public policies like the WPTC actually deter private sector investment in promising energy sources and cost the American taxpayers dearly.
It isn’t just fiscal conservatives who are wary of this wasteful spending. As Warren Buffett summed up eloquently: “we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”
It is about time policymakers hit the pause button and reevaluate their strategy on wind energy. Eliminating wasteful subsidies for the politically connected is a great place to start.
The temporary nature of this tax package gives the new Republican-led Congress a real opportunity to address our nation’s tax code. House and Senate leaders including (soon-to-be) Ways and Means Chairman Paul Ryan, R-Wis., and (soon-to-be) Senate Finance Chairman Orrin Hatch, R-Utah, have begun serious efforts to move the issue of tax reform forward.
It is about time we set a new course. One hopes the next Congress will eliminate the Wind Production Tax Credit as part of a serious effort to streamline and modernize our nation’s tax code.
