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April 27, 2021
2021-0868

Senate Finance holds climate change tax hearing

The Senate Finance Committee's April 27 hearing, "Climate Challenges: The Tax Code's Role in Creating American Jobs, Achieving Energy Independence, and Providing Consumers with Affordable, Clean Energy," included discussion of clean energy and transportation tax incentives, a carbon tax and carbon pricing, the effect of increasing taxes generally, capital gains taxes, and domestic manufacturing.

In an opening statement, Chairman Ron Wyden (D-OR) advocated his Clean Energy for America Act introduced last week that would replace more than 40 tax provisions with a new set of three incentives for clean energy, clean transportation, and energy efficiency. "It would be a job-creating, free market competition to get to net-zero carbon emissions. Clean energy producers and businesses that focus on cutting-edge transportation would no longer have to worry about their tax incentives disappearing because Congress is deadlocked yet again. The bill would help to supercharge innovation in clean transportation and energy storage," Chairman Wyden said.

In his opening statement, Ranking Member Mike Crapo (R-ID) said: "While there are not a lot of specifics on President Biden's energy tax credits in the American Jobs Plan, he is clearly proposing to increase the corporate and international tax rate, and penalize the oil and natural gas industry though the tax code. We must understand the impact of this proposal on the 10.9 million American jobs in the oil and natural gas industries that pay on average seven times the federal minimum wage."

Witnesses:

  • Jason Walsh, Executive Director, BlueGreen Alliance Washington, DC
  • Maria Pope, President and CEO, Portland General Electric, Portland, OR
  • Alex Brill, Research Fellow, American Enterprise Institute, Washington, DC
  • Kevin Sunday, Director of Government Affairs, PA Chamber of Business and Industry, Harrisburg, PA

Testimony in brief:

  • Walsh called for extending and strengthening clean energy tax credits, supporting manufacturing and clean energy supply chains, renewing and robustly funding the Advanced Energy Projects Credit (48C), creating an incentive similar to the 45M technology production tax credit (PTC), and supporting a job-sustaining transition to clean vehicles by updating the existing 30D consumer tax credit to support domestic assembly, domestic content, and high road labor standards and expanding the 30C tax credit for charging infrastructure.
  • Pope called for a smarter electricity grid from solar, wind, and other sources, and discussed the importance of allowing both PTCs and ITCs and allowing regulated utilities to opt-out of normalization requirements for certain investment tax credits.
  • Brill said policymakers should use the tax code to encourage clean energy but noted that tax provisions have limits and it is not possible to subsidize every activity; the better option is a price on carbon or carbon tax, which is superior policy to subsidies, though the two aren't mutually exclusive.
  • Sunday discouraged an increase in the corporate tax rate.

Statements and testimony are available here.

For additional details, see the attached Tax Alert.

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Climate change tax hearing

 
 

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