Wind Production Tax Credits Aren’t Free of Cost

by Bob Weeks on July 24, 2008

Nancy Jackson of the Climate and Energy Project in Kansas has some tips for citizens and candidates to use when talking about global warming. The article Tips for citizens and candidates – talking about the Production Tax Credit contains warnings about what will happen if the Production Tax Credit (PTC) isn’t extended beyond its scheduled expiration date at the end of 2008. Thousands of jobs and billions in investment will be at risk, the post says.

Whether these tax credits are desirable is one issue. But what is not at issue is that these tax credits come with a cost. They aren’t free. Taxpayers have to pay for them, or, as is likely the case, the federal government borrows money to pay for them. Either way, the tax credits take money out of the pockets of people across the country to subsidize the production of wind power.

When people have less money to spend because of the PTC, economic activity is reduced. Jobs are lost. Investment is not made or is deferred. The problem is that if the PTC is eliminated, the loss of jobs and investment will be concentrated and noticeable. Wind farms will cease to operate, it seems the alarmists are saying, and all the workers will be laid off. Television news crews will be at the wind farms on the workers’ last day on the job, and their plight will be reported and editorialized upon.

But every day average people in America have a little less money in their pockets because of these tax credits. Their loss, on an individual basis, is small and not concentrated where it can be reported on. But it is real.

We’ve seen how government subsidies to ethanol producers and corn growers have distorted markets worldwide. The same applies to wind power. To be a viable long-term strategy, wind power must be profitable on its own without subsidy.

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Tagged as: Climate change, Environment, Free markets, Subsidy, United States government

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