Tuesday, October 20, 2009

The Politics of Energy #27 - Renewable Energy Tax Breaks

American Recovery and Reinvestment Act

by Richard Wottrich, Blog Editor

Governments seek to change human behavior through tax policy. Or rather, human behavior is exhibited in the manner in which governments craft and pass tax legislation. Never have we seen such an interesting example of this than through the $787 billion 2009 Amercian Recovery and Reinvestment Act.

You can view this "redistribution of wealth" or "investment of tax revenues" in Orwellian doublespeak at Recovery.gov.

Renewable energy tax breaks under the bill are in the form of tax credits, that is, direct tax offsets paid for by the Treasury:

Solar Systems - solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, residential fuel cell and microturbine systems. They can receive a 30% tax credit for systems placed in service before December 31, 2016.

Automobile Tax Credits - This covers hybrid gas-electric and alternative fuel vehicles. Individuals and businesses who buy or lease a new hybrid gas-electric car or truck are eligible for an income tax credit for vehicles “placed in service” starting January 1, 2006, and purchased on or before December 31, 2010. The amount of the credit depends on the fuel economy, the weight of the vehicle, and whether the tax credit has been or is being phased out. Hybrid vehicles that use less gasoline than the average vehicle of similar weight and that meet an emissions standard qualify for the credit. Hybrid vehicle owners who purchase a qualified plug-in hybrid conversion kit are eligible for a 10% renewable energy tax break, capped at $4,000, through 2011.

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