The Investment Tax Credit Fails… Again

A motion to break the Republican filibuster in the Senate against the Energy Independence and Tax Relief Act of 2008 failed this afternoon by eight votes. The EITRA contains an eight-year, $17 billion extension for renewable energy tax credits, which are due to expire in December 2008. Among the bill’s components are relief from the alternative minimum tax for families and business installing solar panels, a doubling of the credit cap for residential solar to $4,000, and a proposal to prevent utilities from taking up the credits directly. The same bill was blocked on June 10, though Democrats have picked up two votes in favor since then.

Republicans, of which only five voted in favor of cloture, objected to what they deemed tax relief for some at the expense of tax increases for others. Kind of. Democrats proposed to pay for the ITC extensions by delaying the introduction of a tax deferral scheme for hedge fund managers and multinationals making offshore profits. Senate Majority Leader Harry Reid (D-NV) said, “if Senate Republicans continue to maintain the preposterous fiction that closing a tax loophole for multimillionaires amounts to a violation of fundamental principle, you will be denying tax relief to millions of middle-class Americans in the process.” You’ll also be killing hundreds of millions - if not billions - of dollars in future investment for renewable energy companies and putting at stake thousands of current and potential jobs, as well asthe growth of a burgeoning domestic industry.

U.S. companies are already making alternate investment decisions based on ITC’s imminent failure. SunPower CEO Tom Werner said at the beginning of the month, “if the ITC doesn’t happen, we can move our business elsewhere and make up for that. Is that a preferred solution? No. Does America lose jobs with that? Yes. But can we as a company hit ‘08 and ‘09 without the ITC? Yes.” Werner expects policy expansions in other countries to be able to absorb the company’s possible move out of the U.S., though his stark warning is “not to suggest it would be easy, it’s to suggest we’re prepared to do that.” Other, smaller companies may not be as prepared.