Failed a Senate procedural vote which required a 60-vote supermajority for passage.
The Legislation:
The Renewable Energy and Job Creation Act of 2008 extends and expands tax credits worth $18 billion for improving energy efficiency and producing renewable energy. The bill also renews and increases credits for business investment, individuals, and households with children. The bill extends the tax credit for energy produced from wind for one year and for energy produced from geothermal, hydropower, wind, and biomass sources for three years. These tax credits will cost approximately $7 billion. The tax credit for investment in solar energy is increased and extended for six years. Additionally, the legislation provides credits for the purchase of fuel-efficient, plug-in hybrid vehicles, for energy conservation in both commercial and residential structures, and for energy-efficient appliances. The bill authorizes $3 billion of bonds for state and local government projects to reduce greenhouse gas emissions and $2 billion of bonds to finance clean renewable energy production. Similar tax credits were included in the Renewable Energy and Energy Conservation Tax Act, which passed the House earlier this year. The bill also extends the Research and Development tax credit for business investment for one year at a cost of approximately $9 billion.
The Renewable Energy and Job Creation Act expands eligibility for the refundable child tax credit by lowering the income level at which the refundable portion of the credit applies to $8,500 per year from $12,050. The legislation increases the federal income tax deduction for State and local property taxes and extends several other deductions, such as the state and local sales tax deduction, the tuition deduction, and the classroom expenses deduction.
The Renewable Energy and Job Creation Act is revenue neutral. The bill taxes the deferred compensation earned by executives from offshore tax havens and delays the phase-in of a tax deduction for U.S. multinational companies.
The Middle-Class Position:
The Middle Class Supports. While politicians are proposing short-term band-aids to deal with rising fuel costs, middle-class Americans are increasingly feeling the effects of an energy policy that harms the environment and favors large oil companies. The energy tax credit expansions and extensions in the Renewable Energy and Job Creation Act are part of a long-term strategy to alleviate high fuel costs, make the country more energy efficient, and ensure that the economy retains jobs in renewable energy and technology. Indeed, a recent study demonstrated that failure to extend energy tax credits for solar and wind power could result in the loss of 116,000 jobs. With the middle class already feeling the effects of weak employment, Congress must strengthen a renewable energy and energy efficiency industry that benefits both the environment and the economy.
Aspiring middle-class families with children are in a particularly difficult situation in an economy of high food, fuel, and health care costs. The Renewable Energy and Job Creation Act’s changes to the child tax credit would make 2.4 million additional children eligible for the benefit and would increase the benefit for 10.5 million more. Expanding the income floor for the credit means that very low-income aspiring middle-class families, who currently benefit less from the credit than higher-income families, will receive the support they need to make ends meet.
The revenue raising provisions of the Renewable Energy and Job Creation Act not only make the legislation fiscally responsible, but make the tax code fairer by eliminating loopholes exploited by wealthy executives and multinational corporations.
From the Experts:
“We commend the House of Representatives for completing the first step toward final passage of these timely tax incentives. Time is running out to ensure that these incentives can be fully utilized before the end of the year…Investment is the cornerstone of any healthy economy, and with Americans continuing to feel the squeeze of high energy prices, it is essential that immediate action be taken to ensure development of energy-efficient technologies to help ease consumer’s and businesses’ burden…Extensions simply cannot wait any longer, and every day that passes is another day of lost jobs, lost energy, and lost time in making our economy more energy-efficient.” – Kateri Callahan, President, Alliance to Save Energy (5/21/2008)
“As currently formulated, the child tax credit excludes millions of children in low-income working families. Because of differences in income, family composition, and employment status, nearly half of Blacks and 46 percent of Hispanics receive no or reduced benefits from the CTC because their incomes are too low. By comparison, only 18 percent of White children are in that category… Racial disparities would persist with [a] lower floor on earnings, but they would likely become smaller over time as increases in nominal earnings push more and more low-income families above the threshold for the refundable credit.” – Leonard E. Burman and Laura Wheaton, Tax Policy Center (10/17/2005)
Beyond this Bill:
Though the Renewable Energy and Job Creation Act is a positive step in moving the United States towards a renewable energy policy that is not harmful to the environment, much is left to be done. Congress must pass a measure, such as the Global Warming Pollution Reduction Act, that mandates emissions reductions to levels that help the nation avoid the worst impacts of global warming.
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