House Votes Tax Breaks For Alternative Energy [WSJ]
By MARTIN VAUGHAN
May 22, 2008
WASHINGTON -- The House of Representatives passed a $57 billion package of tax incentives for wind, solar and other alternative-energy sources, and other business tax breaks. The House approved the bill on a 263-160 vote.
But Republican opposition to the bill was strong enough to indicate that the GOP would likely be able to sustain a possible veto from President Bush. Thirty-five Republicans voted in favor of the bill, while the 160 no votes on the bill are well above the one-third threshold needed to sustain a White House veto.
Mr. Bush said earlier Wednesday that he will veto the bill unless provisions he opposes are removed.
Even before that, the bill will have to weather opposition from Senate Republicans to revenue offsets in the bill. Sen. Max Baucus (D., Mont.) has said he wants to take up the energy and business tax package in June. It is still unclear whether Sen. Baucus will move his own bill through committee, or whether the Senate will simply take up the House bill and amend it on the Senate floor.
House Democrats predicted election-year pressures to address the country's energy needs in the face of soaring gasoline prices would eventually lead Republicans to embrace the bill.
"It will be very hard for people to turn down tax extenders and the energy policy that's in this bill," said Rep. Jim McDermott (D., Wash.) at a news conference following the vote.
The House bill would extend energy production tax credits for wind, geothermal and biomass facilities and renew investment tax credits for commercial and residential solar energy. It includes a total of about $19 billion in energy incentives.
It renews for one year tax breaks that expired at the end of 2007 -- including the research tax credit, quicker depreciation for restaurant properties and the state sales tax deduction for individuals.
The bill would end the ability of hedge-fund managers to defer taxes on certain offshore income, raising $24 billion over 10 years. It would put off for 10 years a change in the rules for allocating interest expense from U.S. firms' overseas operations, which was scheduled to take effect next year, raising $30 billion.
House Democrats included those provisions to offset the cost of tax cuts, in keeping with pay-as-you-go budgeting rules.
Republicans argued that tax increases shouldn't be needed simply to renew tax breaks that are currently available.
"This bill shows that the only tool the majority has to meet its pay-go rules is the hammer of tax increases. It's no wonder that to them, every problem looks like a nail," said Rep. Jim McCrery (R., La.), the senior Republican on the House Ways and Means Committee, on the House floor Wednesday.
President Bush said he will veto the House bill unless Congress removes the tax-increasing provisions. In an official Statement of Administration Policy, he also said he opposes prevailing wage requirements related to the construction of electric facilities powered by renewable energy. Mr. Bush also urged Congress to include a temporary provision to shield taxpayers from the alternative minimum tax in 2008.
The House bill would extend for one year production tax credits for wind energy. It would extend for three years production tax credits for certain other alternative sources including open- and closed-loop biomass, geothermal and hydropower.
Under the bill, production tax credits for biomass, geothermal and other renewable sources would be capped at 35% of the cost of the facility. Wind production credits wouldn't be capped.
The bill would renew for six years the 30% investment tax credit for commercial solar and fuel-cell energy property.
It would also create a new, $1.01-per-gallon tax credit for biofuels made from nonfood feedstocks like switchgrass. |
