Sunday Jan 29, 2023

Senate budget bill would boost energy credits, trim tax increases – The Bakersfield Californian


WASHINGTON — The Senate Finance Committee’s tax package would generate about $60 billion less revenue to pay for the rest of Democrats’ multitrillion-dollar social safety net and climate bill, according to a preliminary Joint Committee on Taxation estimate.

Among the changes Senate Democrats added were exemptions for employer pension plans and nonprofits from a new minimum tax intended for the largest corporations, and expansions of clean energy credits to benefit hydropower projects, hydrogen fuel production, energy-efficient home electrical upgrades and more.

The panel left out, for now, House-passed changes to state and local tax deductions that would generate nearly $15 billion over a decade. Combined, the edits left the tax cuts and increases in the bill tallying $886 billion in net revenue to offset other spending, shy of the House version’s $946 billion.

With Sen. Joe Manchin III pushing spending lower than the House-passed $2.2 trillion figure, that’s likely still more than enough to pay for the bill and even trim offsets further — if Democrats can agree on a version the West Virginia centrist will back.

Pensions, nonprofits benefit

The biggest new corporate tax in the bill, which would create a 15% minimum levy on corporations based on income reported on financial statements, would generate $297.5 billion over a decade in the Senate version, the JCT found.

That’s $21.3 billion less than the House-passed version of the tax thanks to the defined benefit pension plans exemption that business groups lobbied for and new text that would avoid taxing large nonprofit organizations’ income.

The tax applies to corporations with income of more than $1 billion on average over three years, or $100 million for U.S. corporations with foreign parent companies. Some larger nonprofits have been concerned the tax could hit them, according to sources familiar with the issue.

Some of the biggest charities, health systems, universities and other nonprofits take in hundreds of millions of dollars, or even over $1 billion, in net income annually. The new language from senators would only count income from a trade or business unrelated to a nonprofit’s mission when determining whether they qualify for the tax and how much they might pay, essentially preserving these organizations’ tax-exempt status.

Hydrogen, hydropower credits

Meanwhile, the Senate version would make some additions to clean energy incentives included in the House bill, a major component of the overall package and a priority of Senate Finance Chair Ron Wyden, who wrote a bill on which the provisions are partly based. The cost of the tax breaks climbed $13.1 billion from the House version to almost $325 billion, according to the JCT.

The cost of tax credits for renewable electricity generation and investment climbed by more than $3 billion in part because of expansions for hydropower projects. The majority of U.S. hydropower generation comes from California and Pacific Northwest states, according to the Energy Information Administration, including Wyden’s home state of Oregon and Finance panel member Maria Cantwell ‘s constituents in Washington state.

The Finance Committee version would expand production tax credits for hydroelectric power generation and add pressurized water distribution systems such as pipelines to the list of eligible power sources. It would also make “hydropower environmental improvement property” eligible for investment tax credits, including hydroelectric dams and projects intended to “add or improve safe and effective fish passage,” such as fish ladders that let migrating fish get around dams and other river obstructions.

Senators also proposed a broader bonus tax credit for putting renewable energy facilities and equipment in …….


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