Green Tax Cuts

[Timber Loftis]

Today's BNA

General Policy
Coalition Blames Five Federal Programs
For Environmental Harm, Wasted Spending


Congress has continually funded five federal programs that should be eliminated because they hurt the environment and waste more than $4 billion annually, a coalition of public interest groups said in an April 13 report.
According to Green Scissors 2004: Cutting Wasteful & Environmentally Harmful Spending, Congress continues to fund industries and programs that "burden the health, environment, and economy."

The annual report is a joint effort of several organizations including Friends of the Earth, Taxpayers for Common Sense, the U.S. Public Interest Research Group, National Audubon Society, National Priorities Project, Physicians for Social Responsibility, Public Citizen, Public Employees for Environmental Responsibility, Republicans for Environmental Protection America, and the Wilderness Society.

Specifically, the report targets five issues--the Delaware River Deepening Project; Market Access Program; Tax Credit for Nonconventional Fuels; Small Business Tax Credit for Sport Utility Vehicles; and Timber Roads Subsidies.

This year's report focuses on eliminating five more of the 60 programs already advocated for cuts by the campaign since its 1995 inception. It said these currently targeted programs represent $4 billion of the more than $58 billion of programs identified in previous reports by Green Scissors.


'Hummer of a Deal' at $1.26 Billion

The tax break that allows small business owners to deduct the entire purchase price of a sport utility vehicle "is one of the most glaring examples of a good idea going in the wrong direction," the report said.
Originally, the tax credit for vehicles over 6,000 pounds gross loaded weight was designed to apply to light trucks and vans used by farmers and businesses that need these vehicles to do their work, such as construction companies. The provision also distinguished light trucks from luxury vehicles, thereby allowing these small businesses to avoid the luxury-tax surcharge.

However, under current law, any luxury SUV priced under $100,000 is completely deductible in the first year. In the first year, a business can deduct $103,150 from the cost of a $105,250 Hummer HI, while the newest $55,000 Hummer H2 is now entirely deductible in the first year.

The report recommended that Congress close "the loophole so that passenger vehicles heavier than 6,000 pounds receive the same deduction as vehicles that weigh less than 6,000 pounds."

It also said, "The Internal Revenue Service should redefine 'passenger vehicle' and 'work vehicle.' "

According to the report, closing this loophole would save taxpayers $1.26 billion over 10 years. The light truck category, which includes SUVs, consume 30 percent more fuel than the average passenger car.


Section 29 Tax Credit

According to U.S. Public Interest Research Group, one of the "most expensive and often abused energy tax credits in existence," is the Section 29 tax credit that cost taxpayers $2.8 billion over five years.
The report said the Section 29 tax credit has "clearly proven ineffective in reducing" foreign oil reliance, which was its intent. If producers convert coal to a synthetic fuel, they can claim the Section 29 tax credit, which is worth approximately $26 per ton of coal.

However, according to the Congressional Research Service, "Virtually all of the added gas output [coalbed methane] has substituted for domestic conventional natural gas rather than imported petroleum, meaning that the credit has basically not achieved its underlying energy policy objective of enhancing energy security," while supplying the United States with cleaner burning domestic fuel.

The Section 29 credit "essentially doubles coal companies' profits at the expense of taxpayers," the report concluded and recommended elimination of this tax credit, saving taxpayers $2.8 billion over the next five years.


Budget, Environmental Priorities

"With skyrocketing budget deficits, Congress must decide where its priorities lie--what will be funded and what will be cut," the report said, offering "a few practical solutions to policymakers that will assist in reducing the federal deficit while simultaneously protecting the environment."
The coalition also is calling for political leaders "to unite behind a common-sense agenda" to end wasteful and environmentally harmful spending through a political alliance born in July 2003, known as The Green Scissors Caucus. The caucus was led by Reps. Christopher Shays (R-Conn.), Earl Blumenauer (D-Ore.), Steve Chabot (R-Ohio), and Robert Andrews (D-N.J.) with a common principle of eliminating environmentally harmful and wasteful spending.

The environmental, tax savings report, Green Scissors 2004: Cutting Wasteful & Environmentally Harmful Spending, is available at http://www.greenscissors.org/publications/gs2004.pdf on the World Wide Web.

By Pamela Najor

[pritchke]

Up here we can buy something called green tickets. For every green ticket bought a certain amount of energy from green sources goes onto the grid. You end up paying more for your electricity but you do your part for the environment, and you get to claim the green tickets on your income tax. No, I don't buy it I am still replacing my light bulbs with the curly expensive energy efficient ones that last 4 to 6 times as long, and reduce the cost of your electric bill. I am taking it one step at a time. A Tax Credit for Nonconventional Fuels seems ludicrous to me up here that is the stuff they like to tax. Farmers and businesses usually get a tax cut from fuels as part of there business expenses but if they were somehow using sources of power such as wind, solar they should probably get a bigger tax cut.

[ 04-14-2004, 10:46 AM: Message edited by: pritchke ]

[John D Harris]

That's a problem with social engineering through the tax code, let the marketplace and a new "dark age" take care of the problem