This past week, the U.S. Treasury Department released a proposal for reforms of a number of business taxes.
This proposal would bring changes to the federal Production Tax Credit for wind energy projects. Wind energy in the U.S. depends heavily on tax incentives provided to companies by the federal government. Without these incentives, many companies would likely show modest interest in alternative energy as a whole. Over the past two years, the federal government has had a somewhat volatile relationship with alternative energy, a fact that the Treasury Department is looking to reconcile.
The proposed reform to the Production Tax Credit would make the credit permanent and would make it refundable.
Conventional tax credits enables companies specializing in a particular industry that could be beneficial to the country as a whole, such as alternative energy, to pay reduced taxes for business operations. In some cases, these credits could reduce a company’s taxes to zero. In this way, alternative energy businesses are able to flourish with fewer financial stresses and can devote more money towards deploying solar, wind and hydrogen energy initiatives. One of the problems with many tax credit initiatives is that more money is consumed by large tax equity firms rather than alternative energy projects.
A refundable tax credit allows companies to make more use of the money it received through tax equity.
Essentially, participants of an alternative energy project can receive money equal to the value of the tax credit. This allows companies to make use of money that they did not have access to previously. This money could go a long way in the wind and solar power industry, where progress has been somewhat hindered due to lackluster government support.
The Treasury Department believes that a refundable tax credit for wind energy projects could make community wind energy more of a realistic possibility. This kind of tax credit is expected to make it easier for communities to take ownership of wind energy projects. These projects can create a number of jobs for these communities and help lower the cost of energy significantly as they help communities move away from fossil-fuels.
Article: U.S. Treasury Department proposes refundable tax credit for wind energy
Article Source: Hydrogen Fuel News
Author: Angie Bergenson