Tax Bill Gave Hope for Parity

Since early 2017, GEO and its allies were cheered by H.R. 1090 (cosponsored by Reps. Tom Reed, R-N.Y., and Mike Thompson, D-Calif.) and companion legislation, S. 1409 (sponsored by Sens. Tom Carper, D-Del., and Dean Heller, R-Nev.) Both bills would correct the inequity created by Congress by extending the residential and commercial tax credits for GHPs and other orphaned technologies until Jan. 1, 2022, just like they did for solar:

• The residential income tax credit would be retroactive to Jan. 1, 2017;
• The residential credit would be 30 percent of installed cost and continue at that level until 2020 when it would drop to 26 percent and then at 22 percent for 2021, ending Dec. 31, 2021; and
• The 10 percent commercial investment tax credit would be extended until Jan. 1, 2022, and change the language for placed in service to “property the construction of which begins before Jan. 1, 2022.”

Last month, the House of Representatives included the tax parity language of H.R. 1090 in its much vaunted tax bill. The language would correct the inequity created two years ago when Congress extended tax credits for solar and wind but not for GHPs and several other “orphaned” clean energy technologies. GEO lauded Kevin Brady, R-Texas, chairman of the House Ways & Means Committee, and Paul Ryan, R-Wis., speaker of the House, for agreeing that Congress should not have picked winners and losers among renewable energy industries with its omnibus spending bill in December 2015. Even though the Senate version of the tax bill did not address the tax credits, GEO remained confident that our tax credit language would survive conference committee deliberations.

But those hopes were dashed when the Senate and the House released and passed their final tax reform bill, purged of our provisions for tax credit parity for GHPs and orphaned clean energy technologies.

Good News with Senate Tax Extenders Bill

After being dropped from the tax reform bill, GEO’s strategy immediately pivoted to inclusion of S. 1409’s tax credit parity in a bill to extend several popular business tax breaks. Our wish was fulfilled shortly after final passage of tax reform on Dec. 20, 2017, when the Senate released the Tax Extender Act of 2017. The measure includes GEO-supported language for reinstating and extending both residential (Sec. 25D) and commercial (48[a]) tax credits. The Senate tax extender bill extends our credits for the full five years from Jan. 1, 2017, through Dec. 31, 2021, with a phase-out of 25D similar to solar, with “placed in service” language changed to “construction commenced.”

Most importantly, we were successful in distinguishing the GHP tax credits from 33 other provisions in the legislation that are only granted a year retroactive to Jan. 1, 2017, and a one-year extension to the end of 2018. Now our challenge is to make sure the language of S.1409 remains firmly in that legislation with no changes. Working in our favor is the Senate bill’s inclusion of a tax credit extension for the nuclear power industry and a provision for carbon sequestration to fight greenhouse gas emissions, putting in place a broad coalition of other industries that will be pushing for passage of the legislation.

In a recent interview with Beltway news outlet, Politico, Brady said when work accelerates on tax extenders, he is ready. So is GEO, with the message that the GHP industry is bleeding jobs after Congress chose winners and losers among clean energy technologies that is destroying a 100 percent domestic industry. Congressional leaders must understand that if our tax credits are relegated to a one year retroactive and one year forward fix, our jobs are not coming back. At the time of this writing, it seems likely it will be part of a continuing spending resolution scheduled for Jan. 19.

Either way, it can’t come soon enough. It’s high time that Congress lives up to its promises and legislates GHP parity with the solar industry. That means nothing less than equal tax credit treatment with the full 5-year extension (2017- 2021) of tax credits for GHPs now contained in the Senate Tax Extender Act.  

Publication date: 1/8/2017

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