Quantcast

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

Mary Daly, president of the San Francisco Federal Reserve Bank, poses for a photograph. Nick Otto / Washington Post / Getty Images

It seems the reality of the climate crisis is too much for the Federal Reserve to ignore anymore.

Read More Show Less

Passengers trying to reach Berlin's Tegel Airport on Sunday were hit with delays after police blocked roads and enacted tighter security controls in response to a climate protest.

Read More Show Less
Sponsored
A military police officer in Charlotte, North Carolina, pets Rosco, a post-traumatic stress disorder companion animal certified to accompany him, on Jan. 11, 2014. North Carolina National Guard

For 21 years, Doug Distaso served his country in the United States Air Force.

He commanded joint aviation, maintenance, and support personnel globally and served as a primary legislative affairs lead for two U.S. Special Operations Command leaders.

But after an Air Force plane accident left him with a traumatic brain injury, post-traumatic stress disorder (PTSD), and chronic pain, Distaso was placed on more than a dozen prescription medications by doctors at the U.S. Department of Veterans Affairs (VA).

Read More Show Less
(L) Selma Three Stone Engagement Ring. (R) The Greener Diamond Farm Project. MiaDonna

By Bailey Hopp

If you had to choose a diamond for your engagement ring from below or above the ground, which would you pick … and why would you pick it? This is the main question consumers are facing when picking out their diamond engagement ring today. With a dramatic increase in demand for conflict-free lab-grown diamonds, the diamond industry is shifting right before our eyes.

Read More Show Less
Preliminary tests of the bubble barrier have shown it to be capable of ushering 80 percent of the canal's plastic waste to its banks. The Great Bubble Barrier / YouTube screenshot

The scourge of plastic waste that washes up on once-pristine beaches and finds its way into the middle of the ocean often starts on land, is dumped in rivers and canals, and gets carried out to sea. At the current rate, marine plastic is predicted to outweigh all the fish in the seas by 2050, according to Silicon Canals.

Read More Show Less
Sponsored
Man stands on stage at Fort Leonard Wood in the U.S. Brett Sayles / Pexels

Wilson "Woody" Powell served in the Air Force during the Korean war. But in the decades since, he's become staunchly anti-war.

Read More Show Less
Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez at a rally in Council Bluffs, Iowa on Nov. 8. Matt Johnson / CC BY 2.0

By Julia Conley

Joined by Rep. Alexandria Ocasio-Cortez Friday night, Sen. Bernie Sanders held the largest rally of any 2020 Democratic presidential candidate to date in Iowa, drawing more than 2,400 people to Iowa Western Community College in Council Bluffs.

Read More Show Less

Scientists have developed an innovative way to protect endangered rhinos from poaching: flood the market for rhino horn with a cheap, fake alternative.

Read More Show Less