Congress is likely to tackle federal tax reform in 2017 and may consider new ideas. One proposal it should seriously consider is clean tax cuts—the application of supply-side tax rate cuts to investments that reduce the emissions of harmful pollutants. Cutting tax rates on income gained from clean investments such as energy efficiency improvements could incentivize investors to tap large amounts of private capital.
Over the weekend the 113th Congress largely wrapped up its work. It looks like this Congress will pass just over 200 bills, the lowest number since World War II. However, before leaving home for the holidays, Congress took action on several bills that will affect energy efficiency:
Washington, D.C.—Tax reform will provide Congress with many opportunities to promote energy efficiency and remove barriers through the tax code, according to Tax Reforms to Advance Energy Efficiency, a new report issued today by the American Council for an Energy-Efficient Economy (ACEEE). The report looks at several major changes to the tax code.
Just in time for tax season, Congress has given American homeowners and businesses a chance to keep a little more of their hard-earned money. Late on January 1, 2013, the “fiscal cliff showdown” ended with the House passing a bill to avert income tax increases for Americans and large cuts in spending for government programs.
Much of the equipment and production processes in America’s factories are decades old and not as efficient as modern equipment and processes in use by many of our international competitors. While some factories have been modernized, many have not. Modernizing these factories will allow them to better compete in world markets by improving product quality and reducing product costs, including savings through reduced energy use.
Washington, D.C.—Well-targeted energy efficiency tax incentives will result in significant energy savings and will get more energy-efficient products into the market faster, according to Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, who testified before the U.S. Senate Finance Committee today. The Senate hearing focused on appropriate uses of the federal tax code for promoting investments in energy efficiency, particularly in the context of emerging discussions on tax reform.
As the nation begins to ponder tax reform next year, we have an opportunity to create a new corporate tax structure that encourages investments that benefit society, such as energy efficiency, as well as the businesses that make these investments.
There is substantial talk in Washington about tax reform being a key issue for 2013. Generally this is perceived to mean simplifying the tax code by scaling back tax deductions and credits, and using the money saved to both lower marginal tax rates and help lower the federal budget deficit. In such a climate, where do energy efficiency tax incentives fit in? Such incentives have been in place in varying forms since 2005, and several that recently expired may be extended at the end of this year.
Are Energy Efficiency Investments Being Discouraged by the Way the Federal Tax Code Treats Depreciation?
Is it possible that something as mundane as the treatment of depreciation by the federal tax code could be negatively impacting investments in energy efficiency? That is the question ACEEE attempts to answer in the new white paper, Depreciation: Impacts of Tax Policy.