Who Do Green Tax Breaks Really Help?

November 7, 2019

In 2015, Congress renewed the Solar Investment Tax Credit (ITC) that started in 2005, with an extension through 2021. The ITC gives a 30 percent tax credit for new construction on systems that performed solar water heating, solar space heating and cooling, and solar process heat.

The tax credits, along with technological improvements and market forces helped grow the solar energy industry to what it is today. Renewables generate nearly 20 percent of the total U.S. electricity and more than one-thirds of new generating capacity.

The market is now mature enough that solar can compete with traditional energy sources, and these tax credits – that benefit the very wealthy – are no longer necessary.

The Washington Times reports:

Green energy tax breaks go to the very wealthy — those who can afford the stylishness of a Tesla and cluck their tongues at those who can’t. It reminds one of the classic South Park episode where hybrid cars release so much “smug” into the air that a toxic cloud forms over San Francisco.

Indeed, researchers at University of California, Berkeley, found that the bottom three income quintiles receive about 10 percent of all credits, while the top quintile hoards 60 percent of them. The average cost of a typical 6-kilowatt residential rooftop photovoltaic system was about $22,000 — not something the average family of four in Dayton, Ohio, can afford.

The regressive clean-energy tax credits are inadvertently increasing economic inequality within the country, pushing the costs onto average Americans and giving tax relief to those who least need it.