Please be aware that the AWEA has just issued the legislative alert shown below. You may want to give your Senator and/or Congressman YOUR views on the issue.
Also, please be aware that the "stimulus" package announced this morning by President Bush and Congressional leaders apparently includes another "depreciation deduction" bonus. While I haven't seen the details, it's likely that it will be similar to the 30% first year bonus adopted right after 9/11 which bonus was then increased to 50%.
If so, this is another HUGE break for the wind industry. "Wind farm" owners already benefit enormously from the 5-year double declining balance accelerated depreciation (5-yr, 200% DB) which permits the following deductions from otherwise taxable income:
1st tax year: 20% of capital cost
2nd tax year: 32%
3rd tax year: 19.2%
4th tax year: 11,52%
5th tax year 11.52%
6th tax year: 5.76%
All other generating units are depreciated over 20 years using 150% DB. The exception is single cycle turbines which can use 15-year 150% DB.
Under the 50% bonus bonanza that expired (at the end of either 2006 or 2007), "wind farm" owners could deduct the following percentages of capital cost:
1st tax year: 60%
2nd tax year: 16%
3rd tax year: 9.6%
4th tax year: 5.76%
5th tax year: 5.76%
6th tax year: 2.88%.
Please recognize that these depreciation allowances for tax purposes permit owners of facilities to "recover" all their capital costs regardless of whether the investment is financed with equity or DEBT.
Again, I do not yet know what the "bonus" depreciation percentage is in the proposed new "stimulus" package.
You can be confident that whatever the provisions in the package, the tax burden that will be escaped by those getting the bonus -- as well as the cost of all the checks that are written -- will be shifted to remaining taxpayers.
Glenn Schleede
AWEA Legislative Action Alert: Congress Needs to Pass a Production Tax Credit Extension Now!
Urge your Members of Congress to extend the Production Tax Credit immediately Take Action!
The Production Tax Credit (PTC) is set to expire at the end of 2008. To maintain existing jobs and to continue growing thousands of new jobs, it is vital that Congress act quickly to extend the wind energy PTC early in the first quarter of 2008. Should we enter late spring without a PTC extension the impacts on wind industry investment will escalate dramatically as the financial community responds to growing uncertainty as to the future availability of the PTC.
Contact your Members of Congress and urge them to extend the PTC immediately.
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