This article is authored by Wally Lafferty.
Critics of the PTC cite a report from the Congressional Joint Committee on Taxation that asserts there is a direct cost to the taxpayer of $13.8 billion over five years due to the wind tax credit.
What most people don’t know is that this estimate was calculated — according to the Congressional Research Service — by determining the “foregone tax revenue” from wind farms that are currently receiving the credit. This estimate was completely based on the assumption that wind farms would be paying a higher tax rate if they had not received the PTC.
This is a completely false assumption and I am astonished that AWEA has not done more to refute the estimate. Had these wind farms not received the PTC, they would likely not have been built in the first place, as evidenced by the 92% drop in new wind-farm starts since the PTC expired in 2013. WITHOUT the tax credit, NO wind farms would have been built and that means there would have been NO tax revenue at all.
A wind farm can produce between $2 million and $10 million in annual income, and owners do pay taxes on that income, albeit at a reduced rate due to the PTC. But taxes ARE paid by these wind farms and throughout the entire supply chain that supports them. Thus, the PTC is in fact a tax revenue GENERATOR. There is no cost to the taxpayer as a result of the PTC. However, there certainly IS a direct cost to the taxpayer (in terms of foregone revenue) for every wind farm that is not built but would have been if the PTC had been extended for the long term.
It’s time to make noise. AWEA needs to sharpen its message and drive the point clearly that the PTC generates tax revenue by promoting the development of wind farms and suppliers that pay taxes. Without the PTC, this important tax revenue from wind simply evaporates.
Filed Under: Financing, News
Paul Dvorak says
No, John. If we apply your argument to the home owners tax credit, fewer would own homes. Who would benefit from that? Only those with rental property.
If you own a home and you used the tax credit, you know you received no check in the mail from the IRS for making payments. You just paid a lower tax rate. What is the argument against that?
Now ask, who benefits from your house? Everyone who lives in the house, of course, your neighbors because you care for the neighborhood, your schools because you pay property taxes, the bank who loaned you the money to buy the house because your mortgage payments (and others) make it possible to make loans to other home owners, and so on. The PTC was a bargain by any measure. It is good for the environment, their neighborhoods, and the nation.
— Paul Dvorak
The tax revenue comes from governments giving the wind factories the money in the first place? Total tax revenue generated is less than total government subsidy (to include RP laws and utility transmission costs – all paid by ratepayers). Wind power is an economic loss for tax payers , ratepayers and neighboring land owners. It is only good for developers and turbine manufacturers.