Ron Wyden needs to chop tax breaks for the vitality trade
President Joe Biden’s upcoming infrastructure plan should drastically reduce tax breaks for the energy industry and focus them on green initiatives, the chairman of a powerful Senate committee told CNBC.
Senator Ron Wyden, who chairs the Senate Finance Committee, said such a revision was high on his agenda.
“I think this would start a real transformation for the economy,” said Wyden, D-Ore., In an interview.
Congress is still in the process of passing Biden’s $ 1.9 trillion Covid relief effort, which is expected to hit the president’s desk next week. However, the Democrats have already started turning their attention to a massive infrastructure initiative that Biden has dubbed “Build Back Better”. The White House has begun meeting with lawmakers from both sides of the aisle to seek contributions to a multi-trillion dollar package.
The Wyden Committee is responsible for the country’s tax legislation and would be responsible for drawing up significant parts of Biden’s infrastructure plan, making him a key player in negotiating the outline of the bill.
Wyden called the system of 44 separate tax breaks for the energy industry “dilapidated” and said his goal was to replace them with just three: one for clean energy, one for clean transportation fuel, and one for energy efficiency.
“I tell my Republican colleagues, ‘Hey guys, we always say we should work together to cut subsidies.’ That’s what I’m talking about, “said Wyden. “I think we can open up a huge variety of economic opportunities [and] Highly qualified, high-wage jobs in clean energy generation. “
GOP lawmakers have warned that the Democrats’ standalone strategy regarding the Covid Relief Act could poison the well for compromising future legislation. Texas Rep. Kevin Brady, the top Republican on the House Tax Committee, warned that changes in industry tax incentives could undermine job creation.
“The energy sector targeted by Democrats can deduct capital costs on a par with other companies – barely any ‘subsidies’ compared to the lucrative tax credits that Democrats will be offering their handpicked ‘green’ companies,” he told CNBC. “Americans deserve a comprehensive approach that means more jobs and affordable and reliable energy.”
Biden has made tackling climate change a government priority and urged lawmakers to remove fossil fuel subsidies from Congress’ annual spending bill. According to the non-partisan environmental and energy study institute, which is committed to sustainable societies, these tax breaks alone amount to around 20 billion US dollars per year. The majority is accounted for by natural gas and crude oil. About 20% are directed towards coal.
Wyden told CNBC that he was still working out the details of his proposal and would not estimate what its price might be.
The Wyden Committee will also have control over any measures taken to increase revenue for the infrastructure plan. The White House has proposed raising the corporate tax rate from 21% to 28%. Wyden said he was considering the increase as well as more targeted measures to encourage domestic production.
“I want us to really get a grip on the various regulations and, unlike today, make sure that the incentives are for doing business in the US rather than overseas,” he said.
This week, Senator Elizabeth Warren, D-Mass., Suggested another way to pay the infrastructure bill: a property tax. It is pushing again for a 2% tax on individuals valued at $ 50 million or more and a 1% surcharge on individuals valued at more than $ 1 billion. She cited the analysis that projects that could raise $ 3 trillion over a decade could potentially cover the entire cost of Build Back Better.
Wyden wouldn’t say whether he supports her plan, only that he “welcomes proposals to make tax law fairer”.
While the next big package will focus on infrastructure, Wyden said he intended to push for additional pandemic aid. He wants to extend the improved unemployment benefit and make recurring stimulus payments – and tie both to more general economic conditions.
“When you speak to people across the political spectrum, you say it makes sense: When the economy is strong, the benefits diminish. When the economy is not so hot, the benefits reflect that,” said Wyden.