November 18, 2017
Opinions, U.S.

End the wind production tax credit

It’s an expensive, wasteful subsidy to an inefficient industry. | By Lamar Alexander | National Review | November 17, 2017 | www.nationalreview.com

Congress is focused on making our backward tax code into something that encourages our nation’s instinct for creativity and innovation. As we look at all the wasteful and unnecessary tax breaks that are holding us back, I have a nomination: At the top of the list should be ending the quarter-century-old wind production tax credit now – not two years from now.

This giveaway to wind developers was meant to end in 1999 but has been extended by Congress ten different times. While the wind production tax credit is scheduled to be phased out by the end of 2019, we should do better and end it at the end of this year, and use the $4 billion in savings to lower tax rates.

The subsidy of Big Wind hasn’t come cheap: In just eight years – from 2008 to 2015 – the credit cost taxpayers $9.6 billion, more than a billion dollars a year. And it gets worse: The credit is expected to cost taxpayers more than $23 billion over just five years from 2016 to 2020, according to the Congressional Research Service.

It also hasn’t done much for most Americans. Despite the billions that Congress has provided in subsidies, wind energy still produces only 6 percent of our country’s electricity. Wind blows only 35 percent of the time – and its schedule is not exactly pegged to our demand – so until there’s some way to store large amounts of wind power, a utility still needs to operate nuclear, gas, or coal plants to cover when the wind doesn’t blow.

Wind turbines also destroy America’s natural beauty. On average, wind turbines are taller than the Statue of Liberty – they’re over twice as tall as the skyboxes at Neyland Stadium at the University of Tennessee. The blades on windmills can be as long as a football field, and their blinking lights can be seen for 20 miles.

Congress needs to stop its habit of picking winners and losers in the marketplace. Twenty-five years of picking wind developers over more-reliable sources of electricity hasn’t paid off. Imagine what innovation we might unleash if we used the billions wasted on wind energy to invest in research to help our free-enterprise system provide the abundance of cheap, clean, reliable energy we need to power our 21st-century economy.

You don’t need to be an accountant to know that our tax code is too complicated, takes too many dollars away from working Americans, and makes it harder to create good-paying jobs. The wind production tax credit is a perfect example of the kind of provision Congress should kiss goodbye.

Ending the credit two years early is a bigger deal than it sounds. Every wind developer benefits from their credit for a decade, so taxpayers will still be paying this year’s beneficiaries in 2027.

As Congress examines ways to cut wasteful spending, I challenge my colleagues to consider all energy subsidies for mature technologies – wind, solar, oil, and gas – as candidates for elimination in a tax-reform bill.

The House tax-reform bill took a step in the right direction by reducing the benefit of the wind production tax credit before it expires. When the House and Senate begin resolving their differences on tax reform, we should consider this decision an easy one.