Green jobs tax incentives forthcoming, top House taxwriter says

House Ways and Means Committee Chairman Sander Levin, D-Mich., indicated during an April 14 committee hearing that he intends to introduce legislation in the near future providing for energy tax incentives designed to spur "green" job growth. Levin did not elaborate on when the bill would be unveiled.

The hearing focused on current energy tax policy and as well as additional incentives taxwriters might consider to promote renewable and alternative energy.

Treasury Assistant Secretary for Tax Policy Michael Mundaca and Senior Adviser to the Secretary of Energy Matt Rogers emphasized in their testimony that the Obama administration supports expanding the section 48C advanced energy manufacturing tax credit by $5 billion. The administration also supports a provision in section 1603 of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) that authorizes the Treasury Secretary to provide grants in lieu of production or investment tax credits for certain property placed in service in 2009 and 2010 (the section 1603 program), Mundaca and Rogers said.

The president proposed expanding the 48C credit by $5 billion in his FY2011 budget. The $2.3 billion that was originally provided in the ARRA was quickly distributed because the government received more technically acceptable applications than the program could fund. The administration stated in its technical explanation of the proposal that "$5 billion in credits would support at least $15 billion in total capital investment, creating tens of thousands of new construction and manufacturing jobs."


Oil & gas incentives on the chopping block?

Levin's plans for offsetting the cost of his legislation remain unclear, although the repeal of oil and gas tax incentives was discussed at length during the hearing. Mundaca testified that the White House believes the incentives are unnecessary because they distort investment in selected areas and that the administration would like to encourage investment in a wider range of energy sources.


Committee debate

Democratic and Republican committee members had favorable comments about the 48C credit and section 1603 program. Beyond those provisions, taxwriters made the case for particular incentives that affect their own constituents, such as incentives for low-income taxpayers, biodiesel production, home energy efficiency, ethanol production, U.S. manufacturing of renewable energy parts, and directing revenues from a possible gas tax back to consumers.

Generally, the debate between Democrats and Republicans revolved around the effectiveness of providing incentives for renewable and alternative energy. Democrats pushed for more wind and solar energy incentives while Republicans questioned whether it is necessary to incentivize sources that make up less than 10 percent of total U.S. energy production. Some Republicans also were skeptical of the effectiveness of energy tax incentives, especially when combined with repealing oil and gas tax incentives.


Senate prospects

Across the Capitol, Senate Finance Committee Chairman Max Baucus, D-Mont., has not indicated whether he plans to consider a similar energy tax incentives bill in the near term. (Senate taxwriter John Kerry, D-Mass., along with Sens. Lindsey Graham, R-S.C., and Joe Lieberman, I-Conn., intend to introduce a comprehensive climate change bill as early as April 26.)


Extenders, small business bills by Memorial Day?

Levin also reiterated his prediction that Congress will complete action prior to Memorial Day on bills to extend expired tax provisions and encourage small business job growth.

The House and Senate have passed separate versions of tax extenders legislation (H.R. 4213), but disagreements over revenue offsets continue to thwart final action.

The House passed a small business jobs bill (H.R. 4849) prior to the spring recess that includes significant revenue offsets such as limiting treaty benefits and repealing the 80/20 company rules. The Senate has not yet indicated if it intends to take up the House-passed legislation or draft its own bill.