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DES MOINES - A tax break that is credited with producing renewable energy and jobs in Iowa is being targeted by conservative groups calling for its elimination.
However, Iowa's leading congressional conservative is more concerned about a threatened presidential veto than opposition from a political action group funded by businesses involved in oil production.
Unless congressional negotiators and the Barack Obama administration can come to terms, Sen. Chuck Grassley worries that the results may be 'something barely better than nothing.”
The federal wind energy production tax credit is one of more than 50 tax incentives being considered by Congress before its session ends next month.
Iowa has become a national leader in wind energy production, and the state and federal tax credits are lauded by those in the industry.
Grassley, the ranking Republican on the Senate Finance Committee, said representatives of Iowa's wind energy industry who were scheduled to meet with him Wednesday say congressional inaction on the wind energy tax credit already is having an effect.
Unless the tax credit is extended, Grassley said in his weekly conference call with reporters, layoffs in the wind energy industry are likely.
However, some groups say the tax break provided to wind energy producers should be eliminated.
Americans for Prosperity (AFP), a national organization that promotes free-market ideals and is funded by the conservative billionaire industrialist Koch brothers from Kansas, recently launched a print advertising campaign in eight states. (Iowa is not among them.)
The ads encourage people to urge their congressional representatives to vote against extending the wind energy production tax credit that AFP says will cost $13 billion over the next decade.
'Americans have been on the hook for these wind subsidies for two decades with little to show for it,” AFP federal affairs director Brent Gardner says in a statement on the organization's website. 'While large corporations have gotten comfortable collecting our tax dollars, the industry hasn't made it in the market, failing to produce long-term job creation or energy affordability.”
Another group, the American Energy Alliance, which also calls on citizens to pressure their congressional leaders, dubs the wind energy production tax credit 'a key part of President Barack Obama and (U.S. Senate) Majority Leader (Harry) Reid's attack on affordable energy, from natural gas and coal to nuclear power.”
Supporters say wind energy is a clean, renewable energy source that helps reduce America's dependency on foreign oil.
'As part of a national energy strategy, we need to prioritize clean energy like wind and act immediately to pass an extension of the (tax credit),” 2nd District U.S. Rep. Dave Loebsack said. 'I believe that as long as gas and oil companies continue to receive tax credits, in light of billions of dollars in profits, we need to continue to provide support for home grown, clean energy.”
Iowa produces more than a quarter of its energy from wind, and the industry employs roughly 7,000 people around the state.
Drew Klein, AFP's state director, said Iowans can hope for the best for wind energy production while opposing tax breaks for the industry at the same time.
'After more than 20 years of this subsidy, I think taxpayers are ready to let the industry stand on its own,” Klein said.
Grassley, who authored the tax credit in 1992, is open to the eventual elimination of the incentive.
'I know it won't go on forever. It was never meant to, and it shouldn't,” Grassley recently said in remarks on the U.S. Senate floor. 'I'm happy to discuss a responsible, multiyear phaseout of the wind tax credit.
'But any phaseout must be done in the context of comprehensive tax reform, where all energy tax provisions are on the table. And it should be done responsibly over a few years to provide certainty and ensure a viable industry.”
He thought negotiators for Congress and the White House were making headway until President Obama threatened to veto the package that includes other tax extensions important to Iowa. One, for example, would maintain a $500,000 cap on expensing depreciated equipment.
If the limit goes back to $25,000, Grassley predicted farmers will be reluctant to buy large tractors and combines, which he tied to layoffs of about 1,000 John Deere employees.
'Tax policy has a lot to do with making business decisions whether you're a farmer or you're John Deere,” said Grassley, who once worked at a John Deere manufacturing plant. 'You need long-term certainty of tax policy so you can plan.
'So maybe if we get this thing passed and farmers start buying tractors and combines, we might get some of the 1,000 (laid-off) John Deere workers back to work,” he said.