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July 27, 2005

If pork is a source of energy, gas will cost pennies a gallon after the tax bill negotiated early today is passed. The bill contains $14.5 billion in corporate welfare tax incentives for energy industries.

Unforturnately, energy doesn't come from pork. But Congress will try to stuff the pig into the gas tank anyway.

From the Tax Analysts (subscriber-only version) story:

The tax package includes billions in tax breaks spread throughout every sector of the energy industry. The oil and gas industry received $1.6 billion in incentives for production that included a scaled-back Senate provision to allow refinery expensing and a House provision to amortize all geological and geophysical expenditures over two years. The gas industry was also given over $1 billion with the 10-year depreciation of gas-gathering lines.

More than $3 billion was slated for electricity infrastructure, including a provision allowing a 15-year depreciation for transmission property and another provision modifying nuclear decommissioning rules.

The coal industry should be pleased with more than $3 billion divvied primarily between the favorable depreciation rules for pollution control facilities and a tax credit for clean coal facilities.

The extension of section 45 tax credits for renewable electricity sources in the Senate bill was included, but it was scaled back to just two years at a cost of just over $2.5 billion. Alternative fuels and vehicle credits in the Senate bill were scaled back to just over $1 billion, while $1.3 billion was set aside for energy efficiency and conservation. Those provisions include new credits for both residential and business fuel and solar cells, energy-efficient commercial property, and energy-efficient appliances.

But Congress knows where to draw the line:

The House was forced to drop a $375 million provision allowing the two-year amortization of rental payments, while the Senate lost several, including a $1.4 billion enhanced oil recovery credit, a $500 million clean coal bonds provision, and a $7 million credit championed by Senate Finance Committee ranking minority member Max Baucus, D-Mont., for retrofitted wood stoves.

Somehow our Nation will have to achieve energy self-sufficiency with un-retrofitted wood stoves. Disgraceful.


Tax Analysts' abbreviated free version of energy bill story.

New York Times coverage.

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