Supporters of tax reform argue that it will make America a better place to do business. We all hope that is true, but tax rates aren’t the only thing that attracts businesses. Before spending money, private investors like to understand the risks of losing money on their investment. Certainty matters. Sure, there are some things you just can’t know or predict, but if the rules are clear and everyone plays by the rules, then investors can measure and accept the risk.
Less than two years ago, Congress passed a law that was in essence tax reform of the wind industry. The 2015 PATH Act included a step down transition and phase out by 2020 of the Production Tax Credit (PTC), which the wind industry has used to help access capital and invest billions of dollars in U.S. energy infrastructure.
As instructed by Congress, the IRS wrote rules so investors and wind developers would know whether and when a project qualified for the PTC under the new phase out.
Based on these rules, deals were done and billions of dollars in private investment were committed. Factory orders were placed, turbines were built, construction contracts were signed and business certainty, unsurprisingly, spurred business investment, which in turn spurred economic activity in communities across the country. In fact, U.S. wind power added jobs nine times faster than the overall economy last year, and there are now over 100,000 wind workers spread across all 50 states.
Fast forward to Thursday. In a few short sentences, the House Republican tax bill effectively said “sorry, we didn’t mean it. We are going to modify the terms agreement.” Some voices are making the case that this change is merely a clarification and that the agreement has been honored, but here’s the reality: this proposal takes away over one-third of the value of the credit, after deals were already made under a different set of rules.
That is the equivalent of changing the rules at halftime and saying the score from the first half no longer counts. But in this case, it’s not a game; there are over $50 billion dollars that have been committed based on the phase out agreement, and thousands of U.S. jobs that benefit from these projects now at risk.
But this isn’t just about the bottom line—this bill could hurt real American families.
My company is a manufacturer of wind turbines. We employ approximately 3,400 people at our four Colorado factories. We also employ another 2,000 wind technicians and site workers who live and work in communities across the country. The booming wind business in the wind-rich Midwest made Colorado a perfect place for us to set up shop because of its valued workforce and established transport system. Our presence goes beyond Colorado as well; we invest over $1 billion annually in American supply chain companies that make component parts for our turbines. That is not just a Vestas story-- it’s one that is repeated across the industry.
This is not about whether you love or hate wind energy. This is about fairness, business certainty, keeping your word, and growing American jobs. Even opponents should acknowledge a deal is a deal and an industry that went first on tax reform should be allowed to finish the game as it started. That is the kind of tax policy that makes America a better place to do business—successful tax reform helps American businesses rather than handicapping them.
Brown is the President of Vestas-American Wind Technology, Inc.