More Ranting on Solar Panel Tax Credits

 

Over the weekend, Biden Administration Energy Secretary Granholm proposed that lower- and middle-income families should buy electric cars and go into debt to install home heat pumps, home insulation, and home solar panels because those families can claim a tax credit in the future. This was her answer for families struggling with inflation. She talked of a 30% discount on prices. Her exact language as to where the 30% discount is coming from is unclear, but it appears she was trying to say that the 30% tax credit specified in the “Inflation Reduction Act” amounts to a 30% discount on the price of installation. She was particularly pushing this at low- and moderate-income families.

But … unless the new tax credits are written differently from most prior tax credits (including prior energy-oriented tax credits), the credits are not “refundable,” meaning that the consumer can use them only to offset the consumer’s federal income tax liability. If the consumer has no federal income tax liability, the tax credit is not “refunded” to the consumer. A large percentage of low- and moderate-income families do not have federal income tax liability. A tax credit is useless to a person with no federal income tax liability.

In 2020 something like 60% of United States households had no federal income tax liability, but 2020 was a weird year for income tax. In 2019 the figure was something like 42%. Nonetheless, a significant number of households or families have no federal income tax liability. A federal income tax credit is useless to them.

And if the family’s tax liability is less than the “value” of the credit, the credit is only useful up to the amount of the family’s tax liability. A potential $6,000 tax credit on a $20,000 solar panel installation (30%) is actually worth only $4,000 to a family with a $4,000 federal income tax liability.

Next, a tax credit is useable only when taxes become due. A family installing a qualifying solar installation in January 2023 will have to wait until filing 2023 taxes in March or April 2024 before claiming the tax credit. Meanwhile, the seller and the installer presumably need to be paid. Who’s going to pay the carrying costs for that for the year plus waiting for the tax credit to be usable? Will installers add that to their financing deal, putting the family further in debt?

Finally (for this rant), most of the touted installations that qualify for tax credits are the types of installations that only a property owner can carry out. Tax credits on those installations are useless to renters (which is a non-trivial portion of low- and moderate-income households).

Energy Secretary Granholm’s suggestions that low- and moderate-income families use debt and tax credits as a strategy for coping with inflation were irresponsible.

Published in Energy
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There are 14 comments.

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  1. CACrabtree Coolidge
    CACrabtree
    @CACrabtree

    Each time I see Granholm talking, I can imagine her wearing one of those Mao caps with a bright red star on the front.  The CCP doesn’t have a better friend in America than Granholm.

    Good post.

    • #1
  2. RushBabe49 Thatcher
    RushBabe49
    @RushBabe49

    Yes, and it demonstrates, beyond a shadow of a doubt, how disconnected from reality everyone in the federal government is.  They have absolutely no idea of how ordinary people live in this country.  If they want something, they order it, put it on their credit card, and pay the bill from their prodigious earnings.  They don’t need a household budget to determine whether they can afford “it” this week, or have to put off a purchase until they can save up the money for whatever “it” is.  In government, paychecks appear miraculously in their accounts, with no pesky pay stubs to evaluate.  Granholm needs to spend a week with one of the black families in DC (if they can find a two-parent family), so she can get an idea of what we peons worry about.  My bet is that it’s not solar panels or electric cars, but being able to afford electricity to keep their lights on.

    • #2
  3. Raxxalan Member
    Raxxalan
    @Raxxalan

    In keeping with my belief that the end game is to make us all medieval serfs again.  I assume she wants the vast majority of people to only have candlelight available. 

    • #3
  4. Jim McConnell Member
    Jim McConnell
    @JimMcConnell

    Granholm seems to be one of the least competent members of the Biden administration, and that’s saying something.

    • #4
  5. Percival Thatcher
    Percival
    @Percival

    Jim McConnell (View Comment):

    Granholm seems to be one of the least competent members of the Biden administration, and that’s saying something.

    Neck-and-neck with Janet “Temporary Inflation” Yellin.

    • #5
  6. Hoyacon Member
    Hoyacon
    @Hoyacon

    Fine post.  Thank you.

    • #6
  7. Vince Guerra Inactive
    Vince Guerra
    @VinceGuerra

    They don’t even refund you what they owe you. How many people are still waiting for refunds while the IRS refuses to  pay back the interest-free loans we were forced to give them?  *raises hand*

    • #7
  8. Dr. Bastiat Member
    Dr. Bastiat
    @drbastiat

    Jim McConnell (View Comment):

    Granholm seems to be one of the least competent members of the Biden administration, and that’s saying something.

    She went to Harvard Law School.  She can’t be stupid. 

    She must know that her point is absurd.  Which means she’s intentionally lying, simply to gain power.  

    Such behavior is not unheard of among Democrats. 

    • #8
  9. Vince Guerra Inactive
    Vince Guerra
    @VinceGuerra

    Dr. Bastiat (View Comment):
    She went to Harvard Law School.  She can’t be stupid. 

    Far from it. And have you ever noticed that some of the worst people in government and the private sector (not stupid, just worst) went to Harvard or Yale? 

    • #9
  10. La Tapada Member
    La Tapada
    @LaTapada

    Raxxalan (View Comment):

    In keeping with my belief that the end game is to make us all medieval serfs again. I assume she wants the vast majority of people to only have candlelight available.

    This is exactly what I have been thinking for about 6 months now, that we are going to end up like medieval serfs.

    • #10
  11. kedavis Coolidge
    kedavis
    @kedavis

    La Tapada (View Comment):

    Raxxalan (View Comment):

    In keeping with my belief that the end game is to make us all medieval serfs again. I assume she wants the vast majority of people to only have candlelight available.

    This is exactly what I have been thinking for about 6 months now, that we are going to end up like medieval serfs.

    Let’s see, in ancient times, candles were made from tallow.  Rendered beef fat.  The Left wants to eliminate cows.

    So, no candelight for you!

    • #11
  12. Raxxalan Member
    Raxxalan
    @Raxxalan

    Dr. Bastiat (View Comment):

    Jim McConnell (View Comment):

    Granholm seems to be one of the least competent members of the Biden administration, and that’s saying something.

    She went to Harvard Law School. She can’t be stupid.

    She must know that her point is absurd. Which means she’s intentionally lying, simply to gain power.

    Such behavior is not unheard of among Democrats.

    Granholm falls into that special category of stupid smart person.  This makes her more of a danger than most stupid people.   

    • #12
  13. Percival Thatcher
    Percival
    @Percival

    Raxxalan (View Comment):

    Dr. Bastiat (View Comment):

    Jim McConnell (View Comment):

    Granholm seems to be one of the least competent members of the Biden administration, and that’s saying something.

    She went to Harvard Law School. She can’t be stupid.

    She must know that her point is absurd. Which means she’s intentionally lying, simply to gain power.

    Such behavior is not unheard of among Democrats.

    Granholm falls into that special category of stupid smart person. This makes her more of a danger than most stupid people.

    Alec Baldwin-level.

    • #13
  14. David Foster Member
    David Foster
    @DavidFoster

    I haven’t look at the tax credit situation for solar panels yet, but I did try to see how this bill will affect nuclear power. Here’s the most comprehensive summary I was able to find.

    An absolutely bizarre level of specificity and micromanagement.

    • #14
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