Is a Tax Credit Extension a Good Idea?

John G. Swanson
October 5, 2010
THE TALK... | Energy Efficiency, Markets & Trends

Tax credits for energy effircient home improvements are scheduled to expire at the end of year. Now, new draft legislation has emerged in the Senate that would extend and even expand those credits.  Yes, I'm sympathetic to the view of many that government should stay out of our business, but I think that's good news. 

The bad news is that, as written, the initial bill provides inadequate credits for windows, particularly compared to other industries' products. Why should a heating system be eligible for a tax credit up to $3,000 and a houseful of R-5 windows only $1,000?  To recognize the importance of a quality installation, the cost of labor covered in the insulation arena is eligible for the credit.  Isn't a quality installation important for windows? Why aren't our installation costs included?

Yes, the initial bill has flaws, but I still think it should be applauded.  What do you think?  That's our poll question of the week.  And I take Senators Snowe and Bingamon at their word that their initial draft is just that–a draft.  They say they are open to comments and suggestions. I hope our industry leaders take them up on the offer and provide them with useful feedback.  And I'd like to hear your feedback too.  Email me or post your comment below. What provisions would you like to see part of an energy efficient tax credit?  And let's not be selfish, what provisions do you think would deliver the most bang for the government buck?

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The selfish window manufacturer side of me want massive tax credits given for purchasing and installing energy efficient windows. However, the selfish taxpayer side of me wants NO tax money given for what should be a wise investment in one's home. And therein lies the problem with government intervention.Too many special interest groups have the ear of Congress, and help craft legislation that is in their own special business interest instead of what is in the best interest for our country. When the 2009 ERRA was passed, I asked one of the legislative assistants who worked on the bill why there was a $1500 cap on windows, but none on geo-thermal heating systems. His answer: they had a better lobbying group than you. It's time we say, "Enough is enough". The massive debt we're accumulating is unconscionable. When I look at my grandchildren and think that they'll be paying off the bills we're running up, and then some, I understand completely the growing level of anger and resentment against Congress.My bottom line is as it always has been: let the free market decide. If people don't want energy efficient windows, doors, heating systems, appliances or widgets, then so be it. One way or another, they will be paying for these, either through buying the products or through increased energy bills. Once the energy bills reach a tipping point, then they make the investment. To take money we don't have to give to people as an inducement to make a wise purchase is akin to bribing your kids with ice cream to do their homework.

Bob, you could not be more correct. Too much central planning and gov't intervention is what got us into this mess. More central planning and intervention will not get us out of it. Gov't incentivizing certain investments over others and using the tax money of others to do it is just as unconscionable as the debt Congress has run up over the last 4 years.

Bob is correct, this is crony capitalism not free market.  Lobbyist have way too much power and make way too much money...we need independant thinking congressman, we need term limits!

Survey Results as of 10/08/2010:

Is a New Energy Efficiency Tax Credit a Good Idea?

No

  

 

64%

 

Yes

  

 

36%

 

A large majority of our poll respondents would appear to share the views of those who submitted comments on the idea of extended tax credits.  They don't like the idea of government intervention and/or spending.

Tim, I want to assure you that I don't get sick of hearing from you folks. I understand where you are coming from. I happen to believe the government has a role to play in increasing our country's energy efficiency, but reading through the list of energy efficiency projects funded by the Department of Energy under the Recovery Act, for example, can make you skeptical very quickly. You can't help but think there would be better ways to create jobs and drive technology advances.

In comparison, I like the idea of tax incentives for homeowners.  And I also know I'm not the only one. I have spoken with numerous replacement window manufacturers and dealers who were very gratefull for the tax credits over the past year and a half.  

"The move to extending the tax credits excites us," worte one manufacturer in response. "We have broken records this year; our residential sales in September have been the best ever. Sixty percent of our windows are sold with triple glass most of them qualifying for R5."  He also backs the idea of a tiered system, as outlined in Senator Snowe and Senator Bingamon's draft bill.  The Window & Door Dealer Alliance offers a similar view on the proposed legislation. 

Personally, I would add that the idea of tax credits is a lot more appealing to me than Home Star, which offered the potential for increased bureaucracy.   Whether any of it comes to pass, who knows.  Those favoring less government can be thankful for the gridlock that seems to dominate Washington these days. 

 

I bet John is really getting tired of hearing how the government should stop printing money they don't have but that sentiment isn't going to change as long as artificial stimulus programs continue to fail and prolong our current econimic downturn. 

To answer John's last question, the most bang for the government buck would be to stop spending and cut taxes.  That would allow the private sector & individuals to have the disposable income which would stimulate real economic growth.  More failed stimulus programs that our great grandchildren will have to pay for is not the answer.

 

 

 

The government should not be spending money it does not have.

People that need the benefit the most have other priorities and cannot spend the money for a realitively small subsidy.  People with disposable income benefit the most, because they are not making a better return than the rebate would yield on their idle funds.  So people who need the savings end up subsidizing those who do not.

If we are going to provide such funds in the name of energy conservation, then residents in Florida should not be subject to the impact requirement, as this doubles there cost for no real payback.  It also means that someone who might be able to buy a much better replacement window, now cannot or will not, due to the added expense or inconveience of hurricane protection, and will keep living with very inefficient "holes" in there structure. 

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