During a speech this week, President Obama presented Congress with a 5-point to-do list, which, as the President proudly proclaimed, would fit on a sticky note. When it comes to unleashing the economy and creating jobs, his suggestions are only worthy of a sticky note. It is particularly telling of the President’s priorities that he spoke up for renewing tax credits for his favored clean energy companies while making no mention of the monumental Taxmaggedon heading toward American businesses and families in 2013.
The President remarked:
…if Congress fails to act soon, clean energy companies will see their taxes go up and they could be forced to lay off employees…since I know that the other side in Congress have promised they’ll never raise taxes as long as they live, this is a good time to keep that promise when it comes to businesses that are putting Americans to work and helping break our dependence on foreign oil. So we should extend these tax credits.
Yes, Congress and the President should absolutely get to work to avoid tax hikes on American businesses and families. Taxmaggedon would hit America with the force of a nearly $500 billion tax hike, which averages to $3,800 for every American family. But avoiding Taxmaggeddon did not make it onto the President’s sticky note. Instead, the President is calling on Congress to extend targeted tax credits such as the Wind Production Tax Credit and to expand the 30 percent tax credit to investments in clean energy manufacturing, which was part of the failed stimulus.
The President claims that checking off the items on his to-do list would create jobs. That’s a particularly interesting claim with respect to the targeted tax incentives for clean energy. Not too long ago, a Spanish study demonstrated that more jobs are lost for every green job that government creates. As Heritage’s David Kreutzer points out, the largest estimates of the so-called green jobs put forth by the recent Bureau of Labor Statistics report are in very different industries than envisioned by many proponents of clean energy subsidies: “There are over 30 times as many green jobs servicing septic tanks and portable toilets as there are in the solar-electric utility industry.”
Taxmaggeddon, which would be the largest tax hike in history by far, would have devastating impacts on American families and businesses. Congress should create certainty for American job creators today by swiftly averting Taxmaggedon. That would do much more to enable the American economy to grow and create jobs than any item on the President’s sticky note.
With respect to incentives for energy industries, Congress should get rid of all targeted tax credits for the energy industry and offset the resulting tax hike with a broader reduction in tax rates, as a bill by Representative Mike Pompeo (R–KS) and Senator Jim DeMint (R–SC) would do.