Issue in Focus
Jan 29 2016
Experience teaches that the federal government does a poor job of picking winners and losers in the marketplace and in the public square. Nowhere is this lesson more evident than in our energy sector where the federal government has squandered hundreds of millions of taxpayer dollars betting on unviable technologies and unsound companies like Solyndra, the solar panel company that went bankrupt in 2011 shortly after receiving more than half a billion dollars in federal loans.
Unfortunately, Congress appears unwilling to learn from these past mistakes, preferring instead to repeat them again, and again, in the future. The case in point: in the 2016 omnibus spending bill passed at the end of last year Congress singled out certain industries for special treatment, regardless of their economic viability, by reviving and extending a number of tax credits for particular energy sources such as wind, solar, geothermal, biomass, alternative fuels, and oil.
These tax credits are not just exorbitantly expensive – they’re expected to cost American taxpayers more than $30 billion over the next ten years – but they’re also unfair. Targeted tax credits like the ones included in last year’s so-called “tax extenders” package unfairly advantage certain industries, not because those industries are more efficient or economically viable, but because the federal government favors them over others. This has major consequences for America’s energy sector. Targeted tax credits and energy subsidies distort incentives, encouraging businesses to invest in influence rather than innovation, and redirect capital according to the preferences of politicians instead of the needs of energy consumers. The upshot? Artificially inflated energy prices for American families.
The Energy Freedom and Economic Prosperity Act, which will soon be introduced in the Senate, gives Congress an opportunity to change course and level the playing field for our nation’s energy producers. This bill would restore fair, open, free-market competition in America’s energy sector, by eliminating all energy tax credits. And in order to offset the increased tax burden that would be imposed on energy providers, the Energy Freedom and Economic Prosperity Act permanently cuts the corporate tax rate, which will benefit all businesses, not just those the federal government favors.
It’s time to get the federal government out of the business of picking winners and losers in the energy sector. The Energy Freedom and Economic Prosperity Act will ensure that energy providers are rewarded based on their ability to provide American consumers with affordable and reliable energy, not their ability to extract special favors from government.