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Why are we not talking about the cost to taxpayers which comes from wind farms that have NOT been built due to expiration of the PTC?

January 12, 2015

Critics of the Production Tax Credit have been citing a report from the Congressional Joint Committee on Taxation that claims there is a direct cost to the taxpayer of $13.8 billion over five years as a result of the wind tax credit.

WHAT MOST PEOPLE DON’T KNOW is that this estimate was calculated — according to the Congressional Research Service — by calculating the “foregone tax revenue” from wind farms that are currently receiving the credit. This estimate was based on the assumption that wind farms would be paying more taxes if they had not received the PTC.

This is a completely false assumption and I am astonished that the American Wind Energy Association has not done more to refute the estimate. Had these wind farms not received the PTC, they would likely not have been built in the first place, as evidenced by the 92% drop in new wind farm starts since the PTC expired in 2013. Without the tax credit, NO wind farms would have been built and that means there would have been NO tax revenue at all.

A wind farm can produce between $2 million and $10 million in annual income, and owners do pay taxes on that income, albeit at a reduced rate due to the PTC. But taxes ARE paid by these wind farms and throughout the entire supply chain that supports them. Thus, the PTC is IN FACT a tax revenue GENERATOR. There is NO cost to the taxpayer as a result of the PTC. There certainly IS a direct cost to the taxpayer (in terms of foregone revenue) for every wind farm that is not built but would have been if the PTC had been extended for the long term.

It’s time to make noise. The American Wind Energy Association should sharpen its message and drive the point clearly that the PTC generates tax revenue by promoting the development of wind farms and suppliers that pay taxes. Without the PTC, this important tax revenue from wind simply evaporates.

One Comment leave one →
  1. February 4, 2015 5:08 pm

    To stretch a metaphor to its breaking point, the “lost tax revenue” is rather like the “sales lost to piracy” struggling authors complain about. You know, the stuff that never existed in the first place…

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