Yesterday the Senate decided to take up legislation to extend a package of tax breaks that expired last year. The task before Senators now is deliberating how much they want to pad Warren Buffett’s bottom line when it comes to the wind production tax credit (PTC).
Speaking in Omaha earlier this month, the Berkshire Hathaway CEO said, “I will do anything that is basically covered by the law to reduce Berkshire’s tax rate. For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”
Buffett is only doing exactly what any reasonable businessman would do to save his company money that can be used elsewhere to invest and grow his business. The problem with the PTC lies with Congress.
Wind-generated electricity has been on and off the public dole since the inception of the PTC in 1992. When it was set to expire again in 2012, Congress passed a one-year extension as part of the fiscal cliff deal. The wind industry got not only the extension but also an expansion of eligibility. This reduces the industry’s taxes $12 billion over the next 10 years.
Now some Senators are considering including a two-year extension of the PTC in the tax extenders bill. Others, such as Senator Jeff Flake (R–AZ), have decried what he has called a “zombie credit”: “Simply put, no industry’s success should be predicated on congressional action,” he said.
The PTC amounts to little more than corporate welfare that has distorted investments and energy prices across the power-generating industry and distributed wealth from states that don’t use wind to those that do. Wind power certainly isn’t impacting global temperatures or emissions—at 4 percent of national generation, wind does not replace power from conventional sources, and the means of constructing wind turbines couldn’t be called “green.”
The wind industry complains that lapses in the PTC disrupt investments, and they’re right. So why not permanently end the PTC? That would free up $12 billion for Congress to make pro-growth changes to the tax code. And not only does this provide the certainty the industry so desires; it also protects taxpayers and helps inform energy investments with what makes most sense for consumers rather than for politicians. Further, the wind industry itself claims that wind power is competitive and “on its way to taking the title as the most affordable source” of energy, thanks to the “continual hard work and innovations of [the] industry.”
It’s time Congress let them try.
