Congress needs to end all energy tax credits, including the green tax credits the White House demanded during the fiscal cliff negotiations, Rep. Mike Pompeo, R-Kan., said as he unveiled legislation that would do just that.
The Energy Freedom and Economic Prosperity Act resurrects legislation that failed in the Senate last year – or “the Great Place of Death, the United States Senate,” as Pompeo put it — that is designed to mitigate crony capitalism in the energy industry by eliminating all energy industry tax credits.
“If we missed one, please let us know,” Pompeo told reporters yesterday during a Capitol Hill briefing. “This is not about wind, this is not about solar, this is about good energy policy and good tax policy.”
So, the legislation also ends tax credits for convention energy sources such as coal, oil, and nuclear power. The Kansas lawmaker, whose home state benefits from subsidies for alternative energy such as wind and ethanol, emphasized the neutrality of the bill and argued that the industries don’t need government support.
“I believe in the ethanol producers, I believe in wind producers,” Pompeo said. “I am confident that some one or all of those energy sources will make it; they don’t need to lean on the taxpayer to support them.” The Energy Department noted that the wind industry employs up to 75,000 people — “the largest start-up in the world,” Pompeo joked.
The legislation could plausibly be used as a bargaining chip in the upcoming debt ceiling and fiscal negotiations. “If it’s a stand-alone bill, that’d be great we’d love to see how many folks really walk the walk and are prepared do the right thing for America,” Pompeo said. “But you could imagine this as part of a corporate tax reform, you could imagine this as part of a fiscal solution as well.”
Though Pompeo’s bill satisfies President Obama’s recent call to close loopholes in the tax code, it would not produce the revenue that Obama wants. “Eliminating these economically unsound tax credits would result in a net tax increase on energy providers, but EFEPA would offset it by requiring the Treasury to lower the corporate tax rate permanently,” the Heritage Foundation explained.
Throughout his presidential campaign, Obama also attacked Mitt Romney for opposing green energy tax credits. “At a moment when homegrown energy, renewable energy is creating new jobs in states like Colorado and Iowa, my opponent wants to end tax credits for wind energy producers,” the president said at a campaign rally last year.
Republican lawmakers, especially those with presidential aspirations, might also be skittish about the bill because Iowa (the crucial first presidential election battleground) “is one the country’s largest and fastest growing wind markets, ranking second among all U.S. states in percentage of in-state electricity generation from wind power,” according to DOE.
That said, Sen. Marco Rubio, R-Fla., Sen. Rand Paul, R-Ky., and House Budget Committee chairman Paul Ryan, R-Wis., supported the legislation when it came out during the last Congress. Ryan co-sponsored the bill on the House side.
“I’m hopeful he will continue to support it,” Pompeo said.