WASHINGTON, D.C. – In the President’s tax and spending plan that passed the House earlier this week, it cuts several clean energy tax credits. Those Biden-era tax incentives were aimed at building up US manufacturing and competition against foreign manufacturers.
“It will certainly raise a lot of revenue this is the biggest sort of tax increase category in the reconciliation package,” said Alex Muresianu, a senior policy analyst at the Tax Foundation.
These hundreds of billions of dollars in clean energy tax incentives were part of former President Joe Biden’s Inflation Reduction Act (IRA) agenda.
“In the overall economy: GDP, investment, consumer spending, that sort of big picture, I don’t think the impact is going to be very big because these are sort of narrowly targeted at specific industries,” said Muresianu. “So, I think the broad impact won’t be that big, but the impact for specific industries will be significant. This changes the economics of a lot of clean energy projects.”
Maria Martinez with the Clean Economy Project said these tax credits helped boost US production of materials and energy technologies while giving the US a more competitive edge in the energy industry.
“They are really crucial to meeting the rising electricity demand,” said Martinez.
Martinez said since the credits were updated in the IRA a few years ago, companies have announced they intend to build more than 300 manufacturing facilities across the country, which could bring in millions of jobs and revenue to local communities.
According to online data, more than 16-million dollars worth in clean energy investment projects have been announced in the state, including in northern Michigan, since the IRA was enacted. Martinez said there could be a devastating impact if these incentives are gutted. She shares the economic impact over the next ten years:
“Not building would translate to something in the order of a trillion dollars in lost economic output, about four million jobs, something like 130-billion in tax revenue,” said Martinez. “And that’s really important because tax revenue helps improve schools, transit and other local services. So, we’re not just losing the direct jobs, we would be losing a lot of spillover, positive economic benefits that would come to these communities locally.”
