Category: Energy and Climate

The Navy’s renewable energy plan seems to be fading into the distance.  Yesterday, the Senate Armed Services Committee voted to strip much of its buying power of alternative fuels.  The Senate appears to be nearly in lock-step with the House who are also skeptical of the “Great Green Fleet.” As I noted on National Journal’s Energy & Environment Experts Blog this week, the high cost of renewable energy sources like wind, solar and biofuels will be extremely costly to taxpayers and inefficient for our troops–ultimately weakening our military forces.  You can read my full response here:

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Today’s Bloomberg BNA Daily Tax Report story covers the uncertainty about depreciation allowances and how it is impeding new investment and job growth in the restaurant and retail sector. Legislation (H.R. 1265, S. 687) pending in both chambers would make permanent the 15-year depreciation schedule, which lawmakers and lobbyists said would provide businesses with the certainty they need to make long-term plans. The legislation is not scored, though a two year-plan covering tax years 2010 and 2011 that was enacted in December 2010 cost $3.6 billion over 10 years. “There are projects to renovate retail spaces that are being delayed because of the uncertainty in the tax law right now,” Bernstein said. “And those delays in remodeling projects cost jobs.” Delays cost construction jobs, construction materials, the potential for increased foot traffic and sales, and more employment in the store or restaurant, she said. Koenig said once the extenders phase is passed and substantive work on tax reform resumes, it is possible that lobbyists will ask lawmakers to look at an even shorter depreciation schedule. “We would argue that 15 [years] may even be too high,” he told BNA, noting that in the restaurant industry, the franchisee/franchisor agreement often states…

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I met with House Subcommittee Chairman Paul Brown (R-GA) ahead of my testimony House Subcommittees on Energy and Environment and Investigations and Oversight and the Committee on Science, Space and Technology this morning. I will discuss how costly renewable energy sources (solar, wind, biofuels) receive lion’s share of federal subsidies but are inefficient and yield minimal return to taxpayers. Cutbacks should be considered to help shore up our spiraling U.S. debt. Watch live here:http://mfile.akamai.com/65778/live/reflector:39667.asx?bkup=39949&prop=n

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This week President Obama released his plan for corporate tax reform which could place accelerated depreciation on the chopping block.  I submitted testimony to the House Ways & Means Committee on their recent hearing on “Interaction of Tax and Financial Accounting on Tax Reform.” A couple of key points: If accelerated depreciation for equipment is repealed and replaced with economic depreciation which is generally longer than the current Modified Accelerated Cost Recovery System (MACRS), the cost of capital for new equipment will rise and investment is likely be as much as $191 billion lower in 2015 compared  to the baseline.  Each  $1 billion decline in investment is associated with a loss of 23,300 jobs. Since the 4th quarter of 2007, which marks the beginning of the recession, through the 4th quarter of 2011, U.S. equipment investment has increased by 3.4%. Given the weakness of consumer demand during this period (real personal consumption expenditures increased only 1.8% during the past 4 years) it seems likely that accelerated and bonus deprecation have played a major role in sustaining investment in equipment. You can read the full testimony here.

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