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Environment & Energy Report

House Dems Seek to Expand EV, Solar Tax Incentives (3)

Nov. 19, 2019, 2:41 PMUpdated: Nov. 19, 2019, 10:34 PM

House Ways and Means Democrats called for the expansion of an electric vehicle tax credit and the extension of tax credits for solar energy in a draft package released Nov. 19.

The package is meant to open the door for industry feedback—it already has support from energy groups like the Alliance to Save Energy, according to a release. Democrats hope to fine tune the measure once they get buy-in from industries involved. The package doesn’t include details of how to pay for the expanded incentives.

Rep. Mike Thompson (D-Calif.), chairman of the Subcommittee on Select Revenue Measures, said the package is a “starting point.”

“We are waiting to hear back from my colleagues both on the committee and off the committee who have an interest in this. And from outside stakeholders,” he said.

The push will now begin to include some of these energy provisions in a year-end tax bill that could be attached to must-pass legislation. The bill’s expansion of the electric vehicle credit and battery storage credits, and its extension of credit for offshore wind facilities have the best chance of ending up in year-end legislation, according to a person familiar with discussions.

Senate Finance committee member Pat Toomey (R-Pa.) was critical of the House draft.

“I certainly don’t like what’s in that package, but I haven’t canvassed my caucus yet,” said Toomey when asked about the prospects of a deal with House Democrats.

Electric Vehicle Perks

Currently a $7,500-per-vehicle credit for electric vehicles begins to phase down once a manufacturer sells 200,000 vehicles. Tesla Inc. and General Motors Co. have already surpassed the 200,000-vehicle threshold.

The bill would make a $7,000-per-vehicle credit available for vehicles sold above that limit, up to 600,000.

Senate Finance Committee member Bill Cassidy (R-La.) raised concerns about an expansion of the electric vehicle tax credit in remarks at the Bloomberg Tax Leadership Forum Nov. 19.

“You have to realize that electric car vehicles are being bought by the well-off and being subsidized by those who are less well off,” he said.

An October report from the Treasury Inspector General for Tax Administration found more than 18,000 taxpayers may have received about $82 million tax credits for plug-in electric vehicles that they didn’t qualify for.

Rep. Dan Kildee (D-Mich.), who had introduced the change as a standalone measure (H.R. 2256), said Nov. 19 that he hopes the provision could be added to a must-pass spending package in December.

“I think that there is a real interest in getting something done that both deals with industry needs and the environment,” he said. “I think the real question is ultimately what can we negotiate with the Senate that balances some of the interest over there.”

Other Changes

The measure would extend through 2024 a credit for electricity produced from renewable energy sources, such as qualified hydropower, and a 30% investment tax credit for solar energy property, a perk that would be phased down in later years. The measure would also extend for one year a credit for carbon oxide sequestration facilities that begin construction before the end of 2024.

A credit for wind energy would be preserved at 60% for 2018 and 40% for 2019, and extended through 2024 at 60%.

A credit for biodiesel at $1 per gallon would be extended through 2021, before phasing out through 2024.

“With more and more members of Congress stepping forward to recognize the urgency of our climate crisis, this package of measures deserves broad support,” John Bowman, managing director for government affairs at the Natural Resources Defense Council, said in a Nov. 19 statement. “This is the one chance we have this year to move true climate legislation.”

—With assistance from Sam McQuillan and Colin Wilhelm.

To contact the reporter on this story: Kaustuv Basu in Washington at kbasu@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com