Increasing tax on wind is a bad idea
Addressing the nation’s entrepreneurs and small business owners from the Old Executive Office Building in August 1986, President Ronald Reagan lightheartedly observed that, under his predecessor Jimmy Carter, “government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Reagan’s quip and wry observation about the tendency of government to tax and regulate, rather than allow the market to operate with minimal intrusion, drew laughter from those in attendance at the White House Conference on Small Business just over 30 years ago. But the three- or four-fold increase in the tax rate on wind-energy production a handful of Wyoming lawmakers are thinking about imposing on the state’s emerging wind energy industry is no laughing matter.
Wyoming is the only state in the nation that imposes a $1 per megawatt tax specifically on power generation from wind, a distinction Republican lawmakers should not point to with any sense of pride.
For a state whose Republican-dominated Legislature routinely invokes Reagan’s legacy, this latest proposal under consideration by Wyoming’s Joint Revenue Interim Committee to impose higher taxes on an emerging industry certainly should give policymakers and voters pause.
The Power Company of Wyoming has spent nine years planning the Chokecherry and Sierra Madre Wind Energy Project near Rawlins and Sinclair in Carbon County. Construction was expected to begin this year on the $5-billion, 1,000-turbine project. When built, this project alone would generate up to 3,000 megawatts of clean energy and be the largest wind farm in North America. Just as states like Texas have seen cheaper per kilowatt-hour power for consumers as energy markets have been deregulated and additional capacity from renewable sources like wind and solar have come online, expanded energy-production capacity from Wyoming wind will help consumers, as well as the state and regional economy.
When entrepreneurs decide to invest years and billions of dollars to develop and deploy new technologies, build significant infrastructure, create hundreds of new and well-paying jobs and expand energy-production capacity in ways that meet the important goal of reducing harmful emissions, they do so hoping that tax and regulatory policy will be sufficiently predictable to allow them to earn returns on their significant capital investment.
But as Power Company of Wyoming CEO Bill Miller was recently quoted by the Los Angeles Times: “Just about every legislator we’ve met with asks us, ‘You tell us how much we can tax you before we put you out of business.” That sort of question is one no business owner or entrepreneur should ever hear from his or her elected officials.
Holy Scripture records the observation that: “The wind blows wherever it pleases. You hear its sound, but you cannot tell where it comes from or where it is going.” (John 3:8, NIV). But in Wyoming, it appears certain state lawmakers have decided the sound of the wind mostly sounds like an opportunity for new tax revenue.
It makes sense for the state and federal government to impose severance taxes when oil, gas, precious metals and other minerals are permanently taken from the land. But taxing energy production from renewables like wind and solar in the same way just doesn’t make sense. Nor does it make sense to single out a specific form of energy production that has the capacity to meet consumer demand and help reduce carbon emissions, as if the punitive tax on wind energy was somehow akin to sin taxes imposed on alcohol or cigarettes.
Being the first state in the nation to impose a specific and arguably punitive tax on energy production from wind is bad enough. It discourages investment and development of cleaner forms of energy production from renewable sources. At the very least, state lawmakers should leave well enough alone and decline to pursue any plans to raise taxes on the emerging wind energy industry when the Joint Revenue Interim Committee meets in Buffalo later this week.
Photo by pedrosala
