Tax Credit for 2012?

Christina Lewellen
September 28, 2011
THE TALK... | Energy Efficiency
This week, WDMA expressed its opinion on behalf of the window and door industry that tax credits for energy efficient products should be reinstated. In a letter to House officials, WDMA argued that the tax credits worked to spur purchases of energy efficient fenestration products, particularly among middle-class homeowners.
Here in the industry, many of us believe that tax incentives created demand during an otherwise bleak economic period, and thus created jobs in the manufacturing and home improvement sectors. Some may argue the long-term impact of these types of government incentives, but it’s hard to say that the tax credits didn’t accomplish what was intended in 2009 and 2010. 
My question for you this week is whether we, as an industry, should push for more significant tax credit again?  With the 2011 credit set to expire, should we look ahead to 2012 and argue for reinstatement for the new calendar year? If we were to push for another tax credit period, does the higher amount that was available to homeowners in 2009 and 2010 make more sense than the greatly-reduced incentive offered in 2011? At what dollar threshold will would-be buyers take action to replace their outdated windows and doors? Please send me an email or post a comment below.
 

Survey Results as of 10/4/2011 :

 

The industry should:

Push Congress for larger energy efficient tax credits in 2012.

  

 

50%

Stop looking for energy efficiency tax incentives.

  

 

41%

Push for Congress to renew current tax credits for 2012.

  

 

9%

We're split on our opinions on the value of tax credits, which isn't surprising, I have to say. I know this subject can be a polarizing one and I would venture to guess that your opinion on the matter is not only a result of your business experiences with the credits, but also your political leanings as well.

Let me share some of the feedback I received this week:

"I would like to see even greater tax incentives for energy efficient products," one reader writes, "however the bottom line is our government needs all the money they can get their hands on to balance the unfathomable budget and overcome the huge deficit they created with their frivolous spending and in the end we the tax payers foot the bill not only for the governments frivolous spending but also for any such incentives. Unfortunately I don’t know where the money will come from to fund good programs like this?"

Another reader shares the positive impact on his business: "Yes. It created massive amounts of orders. The tax credit should be revised to be larger for even more energy efficient windows with 366 low-E and triple pane glass. Our December which is usually slow was so good the orders filled our warehouse with zero room to spare."

Still, some have concerns that the tax credits are throwing a natural supply and demand curve out of whack. "From what I can see and lived through during the past three years, the tax credit pulled demand forward and left the industry in the state it is now. Government action is not helpful in the long run. Leave the industry alone and let it find its level. Only then will things turn around. Leave it up to us manufacturers to compete, innovate and market to get the business that is out there. Some will succeed and some will fail but the industry will be healthier in the end."

Contact Christina Lewellen, senior editor, at clewellen@glass.org.

Comments

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I need to replace my windows but will not unless there is a 2012 tax credit equal or greater than the one in 2009 and 2010 . The 2011 tax credit was not a good incentive. I am sure that taxpayers would take advantage of a tax credit, especially if it is greater than 2009-2010. Please keep me informed about any decisions made on a new tax credit.    

I would like to see the tax credit incentive be increased back to the $1500 that was offered in 2009 and 2010. As a homeowner we wanted to purchase windows in 2011 but didnt because of the tax credit being lowered. It just wasnt a good incentive when my husband and I are looking at spending $10,000 on a whole house of windows. If the tax credit gets increased back to the $1500 for 2012 we are ready to pay cash for a whole house of windows. If not then we will be pushing our project back til 2013 in hopes the tax credit gets increased back.

I hope we can return to the 2009-10 tax credit for energy efficient products.  I am sure this will help employment in the construction,  manufacturing and transportation industry.  We need the jobs and the broader tax base which will come from these deductions. 

I definetely would love to see the tax credit be returned to the 2009/2010 status.  With a sluggish building/remodeling industry this would help give it a boost.  This was apparant during October-December of 2010 when my sales skyrocketed.  Consumers were making their final decisions to take advantage of the tax credit, which in turn boosted the local remodeling industry, which in turn increased my sales numbers.  Many times customers mentioned they plan to do additional projects with the help of this tax credit...and they did.  I had several return customers in 2011.  

I do agree with the one responder that our government is spending outside their means, but why should the american homeowner be penalized for our governments ineptness?  There are other programs that need to be revamped or dissolved that don't affect the homeowner, who only wants to increase their homes effinciency, paying less on their energy bills that would allow them to use that savings for other purchases, retirement, investments, etc.     

I would like to point out to people about the big picture. If you have a house with single pane or double pane windows without argon gas, Low-e coating and good weather stripping you are paying for new windows. My costumers in the DC metro area have seen saving from 25-30% with double pane windows and 35-45% with triple pane windows with double low-e and argon gas year round. All testing we have done on the savings have been done with home owners that we have replaced windows for and the percentages are from them. Buying new windows is a big expense and any little tax incentive helps but don’t let that be the only reason to replace your windows.       

 The 2010 tax credit was just about right. It did get interest so it was up to the sales person to meet with the homeowner and provide an honest consultation. As a dealer, that is all I ask. If homeowners were considering replacement windows,why not get a benefit as well? I do not agree with the 30-30 rule for the entire country,but it sure helped here in Arizona. A shame they changed it .

 

I sell windows. The tax credit of 2009-2010 was an incentive for many, but not all. The $200 we have now is an after thought and a token rebate that does not sway anyone's decision.

With the rebates, it just allows the consumer to either get a bigger refund, or pay less in, if they owe. If they don't earn taxable income, they can't get the rebate. So, the government is helping those who are contributing to country through payroll tax. I think a rebate of some sort is a good thing.

I know it drove business during the hard times of 2009 and 2010. I can say however, that I personally wrote as much business this year as I did last year, even with the change in the rebate amount.

I object to the tax incentives for two reasons.

First, government-sponsored incentives are nothng more than government subsidized marketing. Allowing the federal government to meddle in private industry creates more onerous governance.

Second, the tax incentives are tied to stringent performance levels (E-5). These performance levels are highly touted, but offer little return for the additional investment required. which favor some manufacturing capabilities over others. This is favoritism.

Neither of these actions promote a fair market opportunity.

Mr. Shepard I do agree that gov. in most cases should not meddle in private sector. This tax credit is a incentive and is a bit different. But on your #2 reason I don't agree at all. The windows that require a tax credit are the very lowest glass package we sell on a every day basis. The requirments are not stiff at all and further it's the minumum requirements that anyone should have as a consumer if buying windows WITHOUT a tax credit.

Not to mention R-5 is not always necessary depending on the region you're in.   In the midwest you have 9 months of cold and only 3 months of hot.  You need to have a balance of Low E and natural solar energy in order for it to work in the homeowners favor.   

 BINGO!  Both of these are excellent points that nicely sum up my thoughts as well.  So much hoopla around R-5 performance, but the cost to achieve such will never be fully recouped via energy savings given the actual loss via windows compared to the rest of the home.  The gov't needs to stay out of business and out of the way of business and simply govern...

I think that the reduction of the tax credit from $1500 to $200 was a ludicrous reduction. Hardly an incentive for the homeowner. If they do renew, I'd like to see it increased to bolster the business.

Would also like to see them persue removing the opt out clause for the lead law. This by far has harmed the industry more than any reduction or loss of a tax incentive.

Increasing our Federal debt is not the solution to any market. We are in a world economy that is not on a level playing field. We can't expect to live the life styles we have grown accustomed to, if we lower wages to compete with China etc.

We need to raise the standards for imports that meet our requirements and we need to educate our young people. We are losing this country to dumbness. Most young people in America can't tell you which way North is, but they know how to use smart phones.