The Good, the Bad, and the Ugly: The Business Energy Tax Credit

The Business Energy Tax Credit (BETC) has come under fire from Oregonians as the costs of the program have ballooned beyond anyone’s expectations. The program, originally designed to jumpstart the renewable energy industry, hands out millions in tax breaks to renewable energy and energy efficiency projects. Although there is a push for reforming and limiting the program, some important lessons learned from the BETC can be applied to other sectors of the Oregon economy.

On one hand, the BETC program has been enormously successful. Due to the clear benefit of reducing state tax liabilities, the program has grown substantially over time, totaling more than $130 million in 2009 alone. This led to an expansion of renewable energy and energy efficiency projects across the state and even to modest job growth in this sector. This should be an example of how reducing taxes can increase economic growth and create jobs.

On the other hand, the BETC program is an example of poor government planning and picking winners and losers in the economy. Unfortunately, the tax credit only targets government-preferred technologies that lead to less efficient growth than would broad tax cuts. Also, in 2007, the Oregon legislature significantly increased the tax credit for certain renewable energy projects and manufacturers without establishing proper measures to prevent manipulation and provide stability to the cost of the program. This led to an ever-increasing amount of applications filed and a substantial hit to the state’s General Fund.

The BETC program teaches some valuable lessons. Reducing tax liabilities of businesses increases economic growth and job creation, but propping up certain industries over others leads to wasteful manipulation and unfair favoritism.

Todd Wynn is the climate change and energy policy analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Posted by at 06:00 | Posted in Measure 37 | 5 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jean

    With global warming starting to really kick in, we need these credits so Oregon can do its part.
    Remember, too, that we are near the ocean, so it is in our self-interest to do what we can to stem the tide of warming and the oceans’ inevitable rise. I am proud of our work in getting rid of manufacturing and replacing it with service work. I am proud of getting rid of the timber industry. I am happy the mining industry is gone. I am glad that not much is going on out there so we can remain pristine. I am happy Bend is finally feeling it as property values there go down and jobs leave.
    That way our state can once again be like it was 150 years ago.
    Clean, lean, and pristine.
    Join me and the other monkey wrenchers – stop global warming and start anew with an earth-friendly way of life.

    • Mae

      honey, you need to listen to thenews. Global warming is being debunked.

    • Ninja

      Duh, where do you get your information, der….?

    • Chris B

      …and evolution is being debunked, and gravity is being debunked, and electricity is being debunked…
      …try watching anything else besides foxnews

  • Rupert in Springfield

    The BETC tax credit teaches a valuable lesson but unfortunately the only people who would benefit from this sort of remedial instruction are the sorts who lose eyes when eating with a fork.

    There is not exactly a lot of debate that if you saddle industry with high taxes, there will tend to be less growth and thus less jobs. If you cut taxes there will tend to be more growth and more jobs. In short, everyone knows that decreasing taxes is one of the best ways to encourage growth and thus job creation.

    Liberals know it – they tax cigarettes to discourage smoking, they give tax credits such as the EITC and this one, the BETC, to encourage growth of their voter base and to try and make green energy scams work.

    Conservatives know it – they were put on this earth to cut taxes.

    The real lesson of the BETC tax credit should be that giving government the power to pick and choose industries is an open invitation to inefficiency and corruption.

    Would this program have created jobs? Not to the extent it went to windmill scams.

    One of the big selling features of windmills is that, supposedly, once erected they require very little manpower to run and produce energy. Supposedly this is how one day they can be economically viable.

    Sorry, its a little lame to sell windmills on Monday as low cost power due to little maintenance, and then on Tuesday claim windmills deserve tax credits because they will create jobs. Sure, you get a few temp jobs chucking them up, but if that is the measure, then the tax credit becomes simply a subsidy for the labor costs of erection, and none of this is about jobs.

    Gee, that’s no exactly hard logic to figure out. Too bad the state wasted hundreds of millions without thinking that little aspect of things through.

    Might be nice if we started to hold these clowns as accountable as we do those evil CEO’s. God knows bad decisions by government bureaucrats tends to cost the average taxpayer way more then Ken Lay ever did.

    “OK clowns, now you all have your packets in front of you. Now lets each of us open the proposal on the BETC tax credit and all break up into groups and see what we think. Will this create jobs or not and how much will it cost?”

    “OK, I think that’s about enough time…….has everyone had time to discuss compare and contrast?

    “Yes? You in the back…. you have a question?”

    “Ahh, yes, that’s right, this decision is subject to the Taxpayer Protection from Negligence Act…. you will be held partially responsible, up to 10% of your PERS account, if this program winds up costing more than ten times what you estimate and a judge finds you acted with negligence in not anticipating what a reasonable person would have. ”

    “Oh…. ok…. Yes?…… OK, I’m hearing a suggestion from the back that we need to break into groups again to reconsider. Is everyone down with that? Want to take some more time?”

    “Okie dokie while you all are doing that Ill get the Hawaiian Punch and crackers ready for nap time”

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