Democrats who lead the U.S. House of Representatives Tuesday unveiled a new bill to extend tax breaks for investments in solar hot water heaters, wind-power projects and buildings that are designed to be energy efficient.
While the chamber had originally considered passing the bill this week, lawmakers are readjusting their schedules following the death of Rep. Tom Lantos, D-Calif., and now may not take the measure up until the last week in February, after a brief recess.
The House is seeking to pass a wide-ranging, $17.5 billion renewable energy and building-efficiency bill even though Republicans have repeatedly blocked their efforts in the Senate. In renewing their push, Democrats are relying on the same financing plan that produced Senate opposition last year, repealing tax breaks granted to oil and gas companies.
"The American taxpayer should not be subsidizing oil and gas companies during times of record profits and record prices at the pump," said House Ways and Means Committee Chairman Charles Rangel, D-N.Y., in a statement. "We need an energy plan that reduces our dependency on foreign oil and invests in clean, renewable technology that will create jobs here in America."
New York is a big winner in the bill, while the oil companies that reside in Texas would lose out. Under the bill, Congress would provide tax credits for transportation projects connecting with the New York Liberty Zone, the area of Lower Manhattan that was damaged in the Sept. 11, 2001, terrorist attacks.
Oil companies would lose some $13.6 billion in tax breaks granted in 2004 for domestically produced goods. Exxon Mobil (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Royal Dutch Shell (RDSA), and BP Plc (BP) would lose the tax breaks entirely. The deduction would be frozen at 6% for smaller oil and gas companies. That deduction had been scheduled to jump to 9% in 2010, as part of a 2004 law that gradually phased in the manufacturing tax break.
Oil companies would also lose another $4.1 billion under provisions that provide less favorable tax treatment for certain kinds of foreign income.
Republicans are almost certain to cry foul, reflecting their view that the U.S. should focus on increasing domestic oil production, such as through drilling in the Arctic National Wildlife Refuge. Democrats have tended to focus on making the economy more energy efficient and encouraging investment in renewable energy.
Under the bill, Congress would extend for three years, until Dec. 31, 2011, tax credits for investments in wind-power developments, geothermal and trash combustion facilities, and other projects that generate power from so-called renewable energy. For projects that get up and running starting in 2010, the total amount of tax credits that can be earned would be limited to 35% of a facility's costs. The measure is estimated to result in tax breaks of $6.57 billion over 10 years.
Congress would also extend for eight years, through the end of 2016, tax credits for commercial investments in solar-energy equipment. Companies are currently able to receive a credit of 30% of the cost of solar-energy projects, with no limit, but those credits will expire at year's end unless Congress acts.
Congress would extend until the end of 2014 the tax credit for homeowners who buy solar panels or solar hot water heaters. The tax credit would also be more generous, doubling to $4,000 from $2,000.
Democrats are counting on making their case by pointing out that oil companies are earning record profits as oil prices hover close to new highs. Exxon earlier this month reported the biggest annual profit from recurring business ever posted in U.S. corporate history, while Chevron, the No. 2 U.S. oil company, also had a record year.
The bill, called the Renewable Energy and Energy Conservation Tax Act of 2008, is H.R. 5351.
Web link: http://online.wsj.com/article/BT-CO-20080212-71785...
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