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Saturday, July 10, 2010

Call for more energy credits - good idea?

President Obama has asked Congress to expand the advanced energy project credit. Apparently, this is the IRC §48C - Qualifying advanced energy project credit, created by the American Recovery & Reinvestment Act of 2009. This was an unusual credit in that the total amount available was capped and taxpayers had to apply for the credit with that application reviewed by the Departments of Treasury and Energy. For an overview of this credit, see a short article of mine from August 2009 - Handing Out Credits.

According to the White House, the application requests exceeded the available dollars by 3 to 1. The press release (1/8/10) includes a link to a spreadsheet briefly describing the applications.

According to several news reports, President Obama wants Congress to expand the credit in the hopes that it might generate about 40,000 jobs. For example, see Reuters article - "Obama will urge boosting clean energy tax credit" (7/9/10) and Associated Press - "Obama urges increase in clean energy tax credits".

Is this a good idea? Well, how will it be paid for? Why didn't Congress also ask applicants to provide information on how many people they would hire so Congress would have some sense of whether this credit will indeed create jobs?

It is a better version of a credit than usual because it is capped, must be approved in advance, and some of the application data is publicly available. But does it need to be a tax credit? Why not just a grant from the Department of Energy?

What do you think?

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