Quantcast
Environmental News for a Healthier Planet and Life

Wind Tax Credit Labeled 'Welfare' by Koch-Funded Groups

Business

By Jeff Spross

The Institute for Energy Research (IER) has a new study out arguing against tax credits for wind energy on very odd grounds.

Specifically, the study looks into the production tax credit (PTC) for wind energy, which was first passed in 1992, updated by the 2009 stimulus bill, and will probably expire at the end of this year thanks to congressional gridlock.

The study figured out the share of total federal tax revenue paid by the population of each state, and divided the amount of revenue that goes into paying out the PTC amongst the states accordingly. It then compared the amount each state pays to support the PTC with how much benefit from the PTC each state sees. Since wind power is concentrated in a few specific states, some wound up getting significantly more benefit than they paid, and some states got much less. California, for instance, lost almost $196 million more in taxes than it received in tax credits, while Texas got over $394 million more than it paid out.

Graphic credit: Institute for Energy Research

Now, IER is a conservative group, it receives some of its funding from the Koch brothers, and has a long history of pushing fossil fuel interests. At the end of the paper, IER declares that federal wind subsidies “create an unfair redistribution of wealth across state lines that enriches wind companies in select “net taker” states at the expense of taxpayers in other states,” and that “even in states that seem to accrue net ‘benefits’ from federal wind subsidies, these subsidies merely redistribute wealth from taxpayers to wind energy companies.” The American Energy Alliance—IER’s sister organization—took up the cry, promoting the study under the headline “End the Wind Welfare!” And the conservative Washington Examiner ran an ad along the same lines Monday morning.

But one funny consequence of its analysis IER doesn’t mention is that—with the exception of the southeastern states—the “net payers” on its map roughly line up with the blue states in the 2012 election. The top four net payers —California, New York, Florida, and New Jersey—all went blue, suggesting their constituencies are more inclined to support efforts like the PTC to combat global warming and to support renewable energy. Meanwhile, three of the top four net takers—Texas, Oklahoma, and North Dakota—went red, implying they oppose precisely the kind of government intervention they benefit from.

More fundamentally, however, IER’s case proves too much. Most industries are distributed in “clumps” across the country, meaning any effort to aid or support them through tax subsidies will have a similar distributional result as the PTC. The oil and gas industries, for instance, benefit from a wealth of federal tax carve-outs, but the economic activity they generate is concentrated in just a few key states.

Graphic credit: Bureau of Labor Statistics

In fact, the point is so broad it applies to any tax subsidy for any activity whatsoever. Under this logic, the home mortgage interest deduction is an unfair redistribution from people who don’t own homes to people who do; the tax exclusion for employee health benefits is an unfair redistribution from people who don’t get their insurance through their job to people who do; Sen. Mike Lee’s (R-UT) proposed tax credit for families would be an unfair redistribution from Americans who choose not to have children to Americans who do.

In other words, the study’s point is far too broad to work as an argument against the PTC specifically. It can only work as an argument against aiding any kind of choice by any business or individual through the tax code at all.

Short of that totalistic position, which virtually no one actually supports, we have to debate each tax subsidy on its individual merits. And the only way to argue against the PTC on that score is to claim burning fossil fuels doesn’t create market externalities, and/or that climate change isn’t a serious problem.

That claim becomes harder and harder to make with each passing year.

Visit EcoWatch’s RENEWABLES page for more related news on this topic.

EcoWatch Daily Newsletter

U.S. President Donald Trump listens as Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases speaks in the Rose Garden for the daily coronavirus briefing at the White House on March 29 in Washington, DC. Tasos Katopodis / Getty Images

By Jake Johnson

Just over a month after proclaiming that the number of coronavirus cases in the U.S. would soon "be down to close to zero," President Donald Trump said during a press briefing on the White House lawn Sunday that limiting U.S. deaths from the pandemic to between 100,000 and 200,000 people would mean his administration and the country as a whole did "a very good job."

Read More Show Less
Dicamba is having a devastating impact in Arkansas and neighboring states. A farmer in Mississippi County, Arkansas looks at rows of soybean plants affected by dicamba. The Washington Post / Getty Images

Documents unearthed in a lawsuit brought by a Missouri farmer who claimed that Monsanto and German chemical maker BASF's dicamba herbicide ruined his peach orchard revealed that the two companies knew their new agricultural seed and chemical system would likely damage many U.S. farms, according to documents seen by The Guardian.

Read More Show Less
Sponsored
Washington State Governor Jay Inslee and other leaders speak to the press on March 28, 2020 in Seattle. Karen Ducey / Getty Images

Washington State has seen a slowdown in the infection rate of the novel coronavirus, for now, suggesting that early containment strategies have been effective, according to the Seattle NBC News affiliate.

Read More Show Less
A bushfire burns outside the Perth Cricket Stadium in Perth, Australia on Dec. 13, 2019. PETER PARKS / AFP via Getty Images

By Albert Van Dijk, Luigi Renzullo, Marta Yebra and Shoshana Rapley

2019 was the year Australians confronted the fact that a healthy environment is more than just a pretty waterfall in a national park; a nice extra we can do without. We do not survive without air to breathe, water to drink, soil to grow food and weather we can cope with.

Read More Show Less

By Fino Menezes

Everyone adores dolphins. Intelligent, inquisitive and playful, these special creatures have captivated humans since the dawn of time. But dolphins didn't get to where they are by accident — they needed to develop some pretty amazing superpowers to cope with their environment.

Read More Show Less