Tax News

CCH (cch.taxgroup.com) reports:

House Ways and Means Committee Democrats brushed aside dozens of amendments offered by their GOP counterparts and passed the Renewable Energy and Energy Conservation Bill of 2007 (HR 2776) on June 20. The bill, which aims to address the nation's problems with global warming and conservation, proposes a laundry list of tax incentives to encourage the use of alternative energy technology.
The committee voted 24 to 16 to pass the $15.2-billion energy bill, which will now head to the House floor. House Speaker Nancy Pelosi, D-Calif., has promised to pass comprehensive energy legislation before Congress departs from Washington, D.C., for its July 4 recess period.
"This bill helps to get our nation moving toward greater use and production of renewable energy," House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., told lawmakers at the start of the day-long markup session. He noted that GOP lawmakers like ranking member Jim McCrery, R-La., had different opinions about energy policy, but the committee was still attempting to legislate in a bipartisan matter.
"The honeymoon is over," McCrery told lawmakers, as one after another GOP members launched a broad attack against provisions in the bill that would allow states and cities to issue tax-exempt bonds to pay for whatever alternative energy project they deemed legitimate.
McCrery said the legislation was drafted so broadly as to allow taxpayer funding to finance the purchase of hybrid Lexus vehicles. Other GOP lawmakers said the bill would allow cities to give convicted felons like Martha Stewart a tax break on the purchase of energy-efficient, high definition televisions.
Sensitivity to those concerns led the committee to unanimously approve an amendment by Rep. Eric Cantor, R-Va., that would prohibit the use of tax credit bond proceeds to purchase certain energy-efficient products, such as water heaters for hot tubs or pools, cordless phones, DVDs and home audio and television equipment.
Rangel said the broadness of the legislation was intended to give discretion to states and municipalities to design the appropriate alternative energy programs.
"The bonds provided in this bill will allow states and localities the flexibility to tailor and promote energy-efficient policies that will meet their individual needs," said John B. Larson, D-Conn. "The access to different sources of renewable energy and the needs of renewable energy varies by state and this bill gives them the flexibility to make their own determinations."
The bill includes provisions to extend and modify the renewable energy production tax credit for qualifying facilities through December 31, 2012, at a cost of $6.58 billion. The bill also proposes a new $4,000 credit for qualified plug-in vehicles placed in service during a tax year. This provision would cost $1.22 billion over ten years. The measure would also restructure the New York Liberty Zone tax credits to allow the state and city credits for transportation infrastructure projects. The provision would cost $1.65 billion over ten years.
The largest revenue-raiser in the bill is a provision that would deny Code Sec. 199 tax benefits for income attributable to the domestic production of oil and natural gas. The provision would raise $11.4 billion over ten years. McCrery said this provision would result in higher prices at the gasoline pump for Americans.
By Stephen K. Cooper, CCH News Staff
Renewable Energy and Energy Conservation Tax Bill of 2007, HR 2776
JCT Description of the Tax Provisions in HR 2776, the Renewable Energy and Energy Conservation Tax Act of 2007, JCX-35-07
JCT Estimated Revenue Effects of the Tax Provisions Contained in HR 2776, the Renewable Energy and Energy Conservation Tax Act of 2007, Scheduled for Markup by the House Ways and Means Committee on June 20, 2007, JCX-36-07
JCT Description of Chairman's Amendment in the Nature of a Substitute to HR 2776, the Renewable Energy and Energy Conservation Tax Act of 2007, JCX-37-07
Statement of Rep. Jim McCrery on Markup of Bill
McCrery Disappointed by Passage of Energy Tax Increase