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Green energy handouts don’t belong in the tax code

Hoping for a lower tax bill this year? Sorry, Congress rarely delivers relief for hard-working taxpayers. But lawmakers do deliver special treatment for special interests without fail.

With Congress’ lame-duck session less than a month away, both Republicans and Democrats are salivating at the chance to renew a variety of tax handouts to green energy companies. But lawmakers deliberately let these provisions expire last year for a reason. It makes no sense for Congress to reverse its decision now.

{mosads}They’re giveaways that cost taxpayers upwards of $7 billion per year. Yet the American people can’t afford for Congress to give away billions of their hard-earned dollars in corporate welfare like this. These taxpayer-funded handouts benefit a lucky few well-connected companies, who can boost their profits at the public’s expense, but it leaves the rest of us paying more. They win—we lose.

The good news is that if Congress does nothing and lets these unfair provisions expire, the American people will come out on top. But the supporters of these expiring green-energy tax giveaways are trying every trick in the book to get their way. Earlier this year, they even tried to add them on to unrelated funding legislation for the Federal Aviation Administration. Fortunately for taxpayers, that effort was unsuccessful.

Now they’re at it again. Lawmakers want to sneak through these handouts with many other tax extenders under consideration during the lame-duck session. One provision would enable businesses that build “alternative fueling stations” such as ethanol blender pumps to claim $30,000 in tax breaks per pump. Other breaks would go to those who produce alternative fuel sources like biodiesel, or to energy suppliers that produce power using geothermal fuel cells or hydropower.

And these provisions involve real money—energy tax giveaways are estimated to cost $100 billion in lost revenue between 2010 and 2014 alone. 

What’s worse, these tax breaks don’t have a positive impact on consumers or a substantial impact on the environment, as supporters claim. Rather, they just guarantee profits for the industries lucky enough to use them at the expense of taxpayers.

I’m reminded of a tax break brought to my attention by a colleague in Iowa. A wind farm slated for construction there will be Iowa’s largest such project. At first glance it seems puzzling why any energy company would undertake this project, given that U.S. electricity demand is flat.

The answer becomes clear if you listen to the project’s principal investor, Warren Buffett. In 2014, Buffett explained why he finances alternative energy projects like this one. In his words: “We get a tax credit if we build a lot of wind farms. That’s the only reason to build them.”

This helps explain why special interests have so much riding on the tax extenders Congress may resuscitate this year. Although the particular tax credit fueling Buffett’s wind investments was locked into the tax code last year, the future of other alternative energy tax giveaways is less certain.

Will Congress keep the corporate welfare flowing? It depends on whether lawmakers are interested in appeasing special interests or in passing genuine, long-term tax reform for everybody.

Many lawmakers whose legislative careers ends with this lame-duck session may prefer to keep their friends happy with one last vote for corporate welfare. Principled lawmakers who want to do right by their constituents should take a different path, allowing these tax giveaways to expire as intended. As House Ways and Means Committee Chairman Kevin Brady wisely noted in recent weeks, “I believe if you allow one extender it will grow to 10.”

He’s absolutely right. My organization and 40 others are hoping lawmakers will heed Rep. Brady’s warning—we just sent a letter to Congress urging members to take the high road and a principled stance against shoving tax extenders into the 2017 budget deal.

Corporate welfare doesn’t help hardworking Americans; in fact, it hurts us. Instead, we deserve tax reform that lowers everyone’s bills. The American people deserve the same attention in Washington, D.C. that special interests have had for years. In the lame-duck session, lawmakers must pass a budget that sets the stage for true tax reform—and corporate welfare for green energy companies or anyone only takes us farther that goal.

Christine Harbin is the director of federal affairs and strategic initiatives at Americans for Prosperity.

The views expressed by authors are their own and not the views of The Hill.

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