House Dems Unveil Energy Tax Incentive Package, Including Lapsed Biodiesel Program

Posted on 11/19/2019 11:53 AM

Low odds given for package if House Dems keep insisting on budget offsets

House Ways and Means Democrats today unveiled a draft package of more than 20 energy tax incentives, including a multi-year extension and phaseout of the lapsed biodiesel tax incentive, included to get the support of Senate Finance Chairman Chuck Grassley (R-Iowa). Link to summary of bill.

The discussion draft (link) released by bill sponsor Rep. Mike Thompson (D-Calif.) includes a retroactive extension of the $1.00 per gallon biodiesel tax credit, which expired at the end of 2017, but an extension through 2021, followed by a three-year phase out — to $0.75 in 2022, $0.50 in 2023, and $0.33 in 2024. That reflects an agreement with the industry last year.

Grassley comments. He told reporters that he was pleased House Ways and Means Democrats included an extension of the expired biodiesel tax credit in the discussion draft of their energy tax bill, but he criticized Democrats for coming out with a new package of tax breaks "when we can’t even reach agreement on existing tax policy that’s been around for decades."

Grassley and Finance ranking member Ron Wyden (D-Ore.) introduced a package of tax break renewals (S 617) earlier this year that would extend expired provisions through the end of 2019, enabling taxpayers to amend returns filed for this year and also claim the credits on their returns filed next year. But that effort stalled over concerns about cost and other new tax provisions House Democrats want to add, including a package of refundable tax credits for lower-income households (HR 3300).

Grassley focused on the House Democrats' proposed extensions of tax credits for wind and solar developers that were phased out in a late 2015 tax deal based on agreements with the two industries. "I don't know the rationale for the House of Representatives extending" the two credits, he told reporters.

Ways and Means Chairman Richard Neal (D-Mass.) said the panel would invite comment from stakeholders to ensure the bill is "effective in helping improve energy efficiency and eliminating carbon emissions."

There is neither a cost provided for the bill nor anything except the words "to be provided" under the discussion draft's section on offsets. A spokeswoman for Thompson said a Joint Committee on Taxation cost estimate would be available when the bill comes before the committee for consideration.

The proposal also extends the 30% solar investment tax credit for five years. The credit is currently scheduled to start phasing down at the end of this year. It expands the investment tax credit to include standalone energy storage, and extends the wind production tax credit for five years.

It also expands the $7,500-per-vehicle tax credit for electric vehicles. The credit, first introduced in 2009, is capped at 200,000 vehicles sold per automaker, a threshold that Tesla and GM have already met. The proposal would instead apply a new transition period for vehicle sales of a manufacturer between 200,000 and 600,000 EVs, under which the credit is reduced by $500.

Link to a summary of the bill provided by Ways and Means Democrats.

Perspective: The push to extend the lapsed biodiesel tax incentive, and other popular tax incentive items, has faced hurdles over the past few years, especially the demand by House Democrats that the cost of the package be offset. If that continues, odds are low this topic will be part of a late-session omnibus spending measure.


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