The Senate’s top tax writers recently announced that all the tax breaks that currently litter our tax code could be on the chopping block if they rewrite the tax code this fall. Now, special interest groups are up in arms, fearful that they may lose the lucrative tax breaks they’ve become so accustomed to receiving.
National Journal reports that special interest groups spent $773 million during the 112th Congress on tax lobbying. They are working overtime to make sure their tax breaks don’t get whisked away in a tax code overhaul in Congress.
It would be worth every dime for them, too. The incentive lawmakers have to rewrite the tax code is clear: our current code is riddled with loopholes, resulting in massive economic distortion. Many of these tax breaks – roughly $1.3 trillion a year – should be eliminated as part of a broad rate reduction; yet, because of powerful special interests, they are “notoriously hard to eliminate.” Thus, tax writers’ in Congress have adopted a blank-state attitude toward them.
Before the Senate rejected the NAT GAS Act (H.R. 1380), we warned that the bill would engender cronyism and distort the free market in favor of a select few and at the expense of taxpayers. The cherry on top was that it would do nothing to help consumers; in fact, natural gas infrastructure investment was already taking off before this bill existed. We explained in our key vote against this counterproductive legislation:
The free market does not need taxpayer-funded subsidies to choose the next winning technology.
According to recent news reports, one of Senator Robert Menendez’s (D-NJ) most generous donors stood to gain financially if the bill became law. Menendez, of course, was one of the bill’s primary backers in the Senate:
GFS, as the company is known, designs, manufactures and sells products to convert diesel-fuel fleets to natural gas.
President Obama talks the talk when it comes to promoting job creation and economic growth, but he has not walked the walk, especially with regard to the Keystone XL pipeline. As we have highlighted on numerous occasions, his obstruction of the Keystone XL pipeline seriously undermines his claim that he cares about jobs or the economy. The construction of Keystone would be a boon to the economy, generating billions of dollars of economic activity. It would provide many Americans with jobs and increase our energy independence.
Yet, the president has wastefully geared his efforts to helping his cronies in the so-called green energy industry, and taxpayers have been harmed in the process. Dozens of these companies have failed and taxpayers have had to bail them out. Yet, President Obama has the audacity to continue funneling taxpayer money to these types of companies.
The good news is that some members of Congress have called on the President to change his stance. The Hill reports that “all 25 Republicans on the House Foreign Affairs Committee urged approval of the Keystone XL oil sands pipeline in a Thursday letter to President Obama.” A majority of lawmakers in both the House and the Senate support the pipeline, and they’ve made their support known to Obama.
When you read an article about the Export-Import Bank and all the jobs it’s helping to create by “investing” in green energy technologies around the world, hold your applause. One such article touts the $780,000, 10-year loan guarantee for the export of photovoltaic (PV) solar modules from a Georgia-based company, Suniva Inc., to a rooftop solar-power project in Mexico.
While some characterize Suniva as a “fast-growing solar startup often held up as an example of American innovation,” the Norcross, GA-based company is no stranger to the Washington game. According to Open Secrets, the company has spent $360,000 lobbying lawmakers.
In 2011, after expressing “displeasure” with Department of Energy’s “terms and conditions, Suniva abandoned efforts to secure a $141 million loan. Instead, the company received a hefty tax incentive from the Michigan Economic Growth Authority “to open a $250 million solar cell manufacturing facility in the Great Lakes Technology Solar Park.”
When you hear praise for wind energy and the record production, you should take it with a grain of salt. Much of the “success” enjoyed by the industry comes as a result of a tax system that is skewed in their favor, which is a direct result of Washington cronyism. It’s not a benefit to taxpayers, much less to consumers, but because the folks in the federal government have no qualms about it and the special interests on K Street demand it, the subsidies continue.
Interestingly, while 2012 saw record amounts of wind power capacity and record construction, the same optimism didn’t spill over into 2013.
So what’s the catch?
While the wind production tax credit was extended in the last minute fiscal cliff deal, it came too late to encourage those in the wind industry to undertake new building projects.