Wild Energy Tax Credits Save Taxpayers Money
GE Energy Financial Services recently released a study showing that the tax revenues lost due to the federal production tax credit (PTC) for wind energy are more than made up by increased tax revenues from other sources. These additional taxes come in the form of taxes on project income, vendors' profits and individual worker wages, and future tax revenue after the PTCs expire in 10 years. In fact, GE's study estimates that the U.S. Treasury saw a net present value benefit of $250 million in increased tax revenues just from wind projects built in 2007. In addition, the study estimates those wind projects coming online in 2007 generated $6 million per year in local property taxes, $15 million in state income taxes, and operating tax revenue of about $1.5 million per year.
It is critical for the health of renewable energy development in the U.S. that Congress pass long-term extensions of both the PTC for wind energy projects and the related investment tax credit for solar projects this year. Much of the debate in Congress holding up renewal of the PTC is how to pay for the lost revenue. Congress perhaps could avoid this thorny issue by realizing that the tax credits more than pay for themselves.
Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.
