Politics this year have been particularly unusual, but some strange things happening in Washington, D.C. are unfortunately commonplace. For example, some Senate lawmakers recently tried to use a federal aviation bill to revive $1.4 billion in expiring giveaways to green energy companies that have nothing to do with flying.
The Senate rightfully dropped plans to use the Federal Aviation Administration (FAA) reauthorization,H.R. 636, as a vehicle for corporate welfare, but Congress’s continued reliance on “must-pass” legislation to fund key programs provides opportunities for giveaways like these tax credits to piggyback past the finish line.
It’s now up to the House of Representatives to stand up and do the right thing by passing a clean FAA reauthorization bill when it returns to them, and for both chambers to do the same for future legislation, rather than load it up with favors for special interests.
Finance Committee Ranking Member Ron Wyden (D-OR) worked behind the scenes with Senate Transportation Committee Chair John Thune (R-SD) and Senate Minority Leader Harry Reid (D-UT) to slip in a package of green energy credits slated to expire this year for wind power, geothermal heat pumps, fuel cell facilities, and combined heat and power (CHP) properties.
Just four months ago it seemed like these corporate handouts were left on the cutting room floor. Congress decided not to renew the four aforementioned green energy tax credits as part of the nearly$700 billion tax bill signed into law last December. It bears mentioning that Congress did choose to extend $23.8 billion in other handouts to the wind and solar industries over the next decade with an extension and expansion of the wind production and solar investment tax credits.
So what’s so special about these four additional tax breaks that some lawmakers were willing to risk funding for American air travel to make sure they’re renewed? Simply put, many green energy companies rely on tax credits like these to reduce the cost of the energy they produce, making it more palatable to consumers and helping the companies turn profits. On their own, these sources of energy are generally less efficient, less reliable, and more expensive than our more established forms of energy.
Yet this profit for a lucky few companies translates into hardship for everyone else. Distorting the tax code to favor those with the right friends in Washington places a heavier tax burden on regular Americans and businesses that don’t get preferential treatment. And this practice is all too common. Joint Committee on Taxation data indicate that businesses, including multinational corporations, receive 80 percent of special tax favors Congress doles out.
The process by which lawmakers try to squeeze these tax credits by shows just why we need tax reform. Rather than indefinitely renew tax credits as a matter of course, Congress must debate them fairly and openly on their merits—or lack thereof. Circumventing the process and lumping the giveaways onto crucial, unrelated legislation like the FAA bill is a sure sign that lawmakers know the tax credits wouldn’t be able to stand up to a vote on their own.
And contrary to Sen. Wyden’s recent comments that letting these credits expire in last year’s tax package was an “omission,” it was actually the right thing to do. Treating special carve-outs for well-connected companies as perpetual guarantees is one reason federal spending constantly increases and our $19 trillion national debt grows larger.
Congressional leaders should oppose all efforts to attach unrelated bills to the crucial legislation such as the FAA reauthorization—especially if those attachments are entirely unrelated, preferential treatment for a select few companies. My organization, Americans for Prosperity, led a collation of over 30 other free-market groups in calling for senators to oppose attaching tax giveaways for special interests to legislation reauthorizing the FAA.
No matter how strange or controversial the political process may seem in any given year, what doesn’t change is the need for a sensible, fair tax code. The House of should hold firm in opposing extending handouts for green energy as they consider FAA reauthorization this month. Rather than plot ways to sneak preferential treatment into law, our representatives should find ways to reform the tax code and ensure tax policies work for all Americans.