Dive Brief:
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Senate Republicans on Thursday released details on a tax reform package that would preserve tax breaks for renewable energy and electric vehicles slated for reduction or elimination under a House bill.
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The Senate bill, released by leadership of the Finance Committee, would preserve the current $7,500 federal tax credit for electric vehicles as well as a 2.3¢/kWh production tax credit for wind energy slated to sunset in 2020. The House bill would reduce the PTC to 1.5¢/kWh and eliminate the EV tax credit.
- Significant differences between the House and Senate bills – the Senate, for instance, wants to delay a cut in the corporate tax rate by one year – could make for contentious battles in reconciling the two versions of the legislation. The Senate bill is slated for a hearing at the Finance Committee on Monday.
Dive Insight:
The House tax reform bill had a little something for almost everyone in the energy industry, but not necessarily something they would want.
The House bill would reduce the PTC to 1.5¢/kWh from 2.3¢/kWh and firm up the expiration date for the incentive. The bill would also end federal tax credits for electric vehicles. But the bill would also extend an estimated $6 billion tax credit for nuclear power that otherwise would likely expire before the only under-construction nuclear power project would be able to claim it.
The just released Senate tax reform bill, however, would retain the PTC.
"Wind’s okay," Sen. John Thune (R-SD), who sits on the Senate Finance Committee, told Bloomberg. "We think that’s kind of settled now."
In report after the release of the House tax bill, Clearview Energy Partners called the House’s PTC proposal “possible negotiating collateral for a potentially contentious House-Senate reconciliation of very different tax reform bills, and we do not expect it to survive in its current form.”
There are other contentious issues between the two tax reform plans as they stand. In addition to delaying corporate tax cuts, the Senate’s tax reform proposal would eliminate the federal deduction for state and local income and property taxes. The House reached a compromise on that issue by allowing a deduction of up to $10,000 on property taxes.
Most observers expect the Senate to attempt to pass its bill through a procedure move known as reconciliation, which allows budget measures to pass with only the slim majority of 51 votes. If both chambers are able to pass their respective bills, differences would likely be ironed out between Hill staffers in closed-door meetings.
