WASHINGTON – The House of Representatives on Friday approved $110 billion in tax breaks for businesses and consumers as part of a sweeping financial rescue package designed to stave off the credit crisis.
Saddled onto the 450-page bill is a provision to shield as many as 25 million Americans from the alternative minimum tax and $18 billion in tax credit extensions for wind and solar energy production.
Yet to appease lawmakers and make the bill more attractive, several more prosaic tax provisions are included, according to a government budgetary watchdog group.
NASCAR will be able to write off racetrack costs over seven years, and manufacturers of wooden arrows for children will be shielded from an excise tax applied to other shafts. The NASCAR provision was introduced by Rep. Mike Thompson, D-Calif., who voted for the bill.
The bailout package also provides tax rebates on rum imported from Puerto Rico and the Virgin Islands and tax credits for economic development on the island of American Samoa.
“In the midst of a debate over a historic bailout package, Senate pulled out an old bag of tricks: piling billions of dollars of unrelated legislative provisions into the package and daring the House to reject the bailout again,” said Ryan Alexander, president of Taxpayers for Common Sense. “Many of these provisions are tax extenders that have been waiting in the wings for months, hoping for a legislative train to leave the station.”
The bill passed the House on Friday 263 to 171. It was a last-ditch effort of sorts for proponents of renewable energy to get tax provisions extended before they were set to expire by the end of the year. Those extensions, estimated at $18 billion, had repeatedly failed to pass legislative muster in both the Senate and House over the past year.
“These tax incentives will help individuals and companies make important investments to produce energy from renewable sources and reduce our dependence on foreign oil,” said Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee. “By helping companies perform research and develop new technologies, we also create new green jobs at a time when millions are struggling in a slow job market.”
Provisions include an eight-year extension of an estimated $1.9 billion in tax credits on solar equipment purchases by solar energy producers. Wind, geothermal and biomass producers also would receive about $5.8 billion in tax credit extensions.
Beltsville, Md.-based SunEdison, a supplier of solar energy for businesses nationwide, said the tax credits of 30 percent on their investments in solar equipment helps them offer rates that compete with regular electric and other utility companies. If the tax credits weren’t extended by the end of the year, those incentives would drop to 10 percent, according to the company.
For homeowners, the bill removes the $2,000 tax credit cap for residential projects, allowing those who convert to solar electricity to reduce their taxes by up to 30 percent of the project’s cost. Residents also will get tax credits for energy-efficient appliances.
Brad Penney, director of government relations at the nonprofit Alliance to Save Energy, said such tax breaks will lessen the financial burden on homeowners of energy-efficient investments. He said the average family spends $6,300 a year on vehicle and home energy costs – about 13 percent of the average household income of $50,000.
Buyers of plug-in electric cars would get tax credits of $2,500 to $7,500. Electric vehicle recharging stations, meanwhile, would get a one-year extension on $30,000 in tax credits or up to 30 percent of their costs.
Yet the bill also has drawn criticism from environmental groups for its inclusion of $900 million in tax credit extension to refineries using tar sands or coals-to-liquids technology.