Whitehouse Statement Opposing “Tax Extenders”

Talk about speaking truth to money! From the Whitehouse Press Office:

Floor Statement of Sheldon Whitehouse
On H.R. 5771
December 16, 2014

Mr. WHITEHOUSE. Mr./Madame President, later this week, the Senate will likely take up and pass legislation to extend several dozen expired tax provisions. While I support a number of the individual provisions extended by this bill, I rise today to explain why I reluctantly plan to oppose it.

The so-called “tax extenders” package includes the one-year extension of a hodgepodge of over four dozen tax provisions. This extension is not for the year ahead of us, as one might reasonably expect, but rather for the year that’s mostly past us. In other words, we will be extending for 2014 tax programs that expired at the end of 2013. This means that, for the most part, the bill will offer credits and deductions to reward things that have already happened while doing absolutely nothing to help businesses and individuals plan for the future.

If tax policy is intended to influence behavior, the extenders bill is a double failure: it spends money rewarding things that have already happened and offers no incentives for businesses and individuals for the year ahead.

Let’s take for example the production tax credit for wind energy, a program I strongly support that encourages the construction of wind farms. The provision in the extenders bill offers this incentive for properties for which construction has commenced by the end of 2014. That’s three weeks from now. Instead of giving energy companies time to plan and prepare wind projects, we’re saying: if you happen to have one ready to go, you’ve got until the end of the holiday season to break ground. The clock is ticking.

In contrast to Congress’s temporary, year-to-year treatment of the wind tax credit and other incentives for renewable energy, Big Oil and Gas enjoy permanent subsidies in the tax code. It’s long past time to reform the tax code so it reflects America’s 21st Century energy priorities. Permanent incentives for oil and gas and temporary programs for renewable energy is simply upside-down public policy.

In total, there are 50 or so extensions in this bill, and the only thing they seem to have in common is that Congress repeatedly packages them together. It’s truly a mix of the good, the bad, and the ugly. Let’s start with some of the good provisions. In addition to clean energy incentives, the bill extends a popular tax credit that encourages businesses to hire veterans, a host of incentives for energy efficiency, and a provision that ensures that families that lose their homes in foreclosure don’t incur tax bills for the deficiencies. These provisions have strong bipartisan support.

Then there’s the bad: the unjustifiable tax giveaways. These include so-called “bonus depreciation,” a program that allows corporations to deduct the costs of equipment right away instead of spreading out the deductions over the life of the equipment. Congress first included this provision in 2009 in the Recovery Act when it made some sense. The idea was to encourage businesses to accelerate their purchases when the economy most needed the investments. We’ve extended it so many times, though, that now we’re just giving money away to corporations for buying things they would have bought anyway. That’s a nice subsidy for the businesses, but not a wise use of taxpayer dollars.

The bill also includes tax giveaways for NASCAR tracks and racehorses. While I know these sports are popular, it’s hard to justify subsidizing them with taxpayer dollars at a time when we’re running large deficits and face the prospect of more budget sequestration.

And then there’s the ugly, the stuff that does actual harm. There’s a pair of provisions in the bill–the “active financing” and “controlled foreign corporation look through” provisions–that reward U.S. corporations for shifting money overseas to avoid paying taxes. Sadly, there are already a number of provisions in the tax code that encourage companies to move operations and assets overseas. We should repeal those provisions, not enhance them as the extenders bill does.

This one-year, retroactive mixed bag of extensions will increase the budget deficit by over $41 billion. To put that figure into perspective, that’s more than the annual budget for the entire Department of Homeland Security.

Earlier this year, my senior Senator from Rhode Island, Jack Reed, lead an effort to extend unemployment benefits for the millions of Americans who have struggled to find work in this uneven economic recovery. Republicans repeatedly filibustered his unemployment insurance legislation, with many citing the $17 billion price tag and the offsets included to pay for it.

I expect many of these same Republicans will vote to pass the $41 billion tax extenders bill, legislation which is not offset and will add to the deficit. If Republicans are truly as worried about the deficit as many of them claim to be, they need to raise these concerns consistently and not forget them when it’s convenient. Spending through the tax code is still spending, and we should offset it.

Mr./Madame President, next year this body will have new leadership and a fresh opportunity to tackle our nation’s problems. I hope Senate Republicans will show us they can exercise the power of being in the majority responsibly. President Obama says he is eager to work with the Republican majority on several major bills including tax reform. I too am eager to work with Republicans on sensible, responsible tax reform—reform that ends the era of year-to-year extensions, eliminates wasteful tax spending, and decreases the deficit. I thank the chair, and I yield the floor.

Dark and Cold

Richmond Square at the end of Pitman Street

At church this Sunday they were having a genteel argument over whether 2010 is the first year of a new decade or the last of the preceding. Most of the snow from the big storm has melted in two days of warm and mild weather.

Now an arctic front is moving in promising dry cold and wind like a knife. Already I’ve had to put extra salt on the steps.

I watch the sun. I promised myself not to look at the almanac until after the New Year, because now the sun stands still and the days are not getting longer quite yet. I run in and out of houses, overheated for the most part. The elderly complexes are well-protected from the elements. The triple-deckers usually have a designated room where a space heater wins out over the drafts. I would like to go on a retreat, but that’s not how we live, or make our living.

There’s still something special about this time of year. I’m keeping the tree up for a while.

Exploring the Solar Thermal Option for Home Heat

UPDATE: I heard back from Senator Whitehouse’s office that his staff is “still checking” into the solar tax credit issue.

Tired of oil bills going up hundreds of dollars every year? Want to help reduce carbon emissions in the atmosphere? Perhaps you should consider a solar thermal heating system for your home. All you need is an unshaded house and the ability and will to invest your heating cost dollars up front.

We had a representative from Solarwrights come to our house recently and estimated we could put in a solar thermal system for about $15,000. Unfortunately, we have two large oak trees that shade our house and they would need to be removed, and we are not willing to do that. So solar thermal is not an option for us at the moment.

If we were able to get the solar thermal system, we would have received payback in reduced oil costs in about 15 years. That’s assuming that the solar thermal could generate about 50% of the energy for our home and the other 50% would continue to be paid out in oil costs. In other words, our average oil costs for this year look like they’re going to be about $2,000. Once a solar thermal system was installed, we would pay about $1,000 a year for oil.

Also, it is estimated that you can recover about 65% of your cost for a solar thermal system with the tax credits that were available, and that hopefully will continue to be available. See this post for more about the removal of this tax credit from a current energy bill. I have also contacted Sheldon Whitehouse’s office about the solar tax credit and am hoping to hear back about when and where this will be reintroduced.

It is estimated that the average value of a home goes up by $20,000 when a solar thermal system is installed. If it’s really true you can earn your money back in 10-15 years (and that’s at current oil prices — the payback will grow shorter if oil prices continue to rise) and on top of that, you can recover 65% of your money in tax credits, and on top of that you’d be doing something good for the environment, I can’t imagine why more people won’t opt for solar thermal as time goes on.

Wikipedia has a good page with more information on various types of solar hot water and heating options.