White House Economist: Tax Code Includes Green Transition
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The Chair of the White House Council of Economic Advisers, Lael Brainard, has stated that it would be difficult for Republicans to reverse the sustainable energy provisions of the 2022 Inflation Reduction Act (IRA) if they win majorities in the upcoming general election. The IRA incentivizes businesses and households to transition to sustainable energy by integrating it into the tax code, making it resistant to rapid policy alterations. The IRA includes a range of clean energy tax credits and deductions being implemented by the IRS, which have already lead to an increase in manufacturing investments from an $80 billion level to more than $220 billion after the act’s passage.
Impact of 2022 Inflation Reduction Act on Sustainable Energy
Lael Brainard, Chair of the White House Council of Economic Advisers, expressed confidence that Republican majorities, if won in the upcoming general election, would not easily reverse the sustainable energy provisions included in the 2022 Inflation Reduction Act (IRA).
She stressed that the IRA, which builds energy transition into the tax code and incentivizes households and businesses to change behaviors, is not easily amendable due to its complexity and integration into the tax system. “This is now the tax code…These rules are complex…they take a very long time to amend”, she said during an event in Washington.
The IRA includes many clean energy tax credits and deductions for both households and businesses, currently being implemented by the IRS. Households can avail credits for associated costs of solar electricity products, wind turbines, fuel cells, and energy storage units until 2032. Credits also extend to energy efficiency upgrades, including insulation materials, windows, exterior doors, and home electric vehicle chargers.
Clean manufacturing investment and production, biodiesel and alternative fuels, nuclear power production, carbon sequestration, and electric vehicles are among the numerous technologies for which businesses can claim credits.
Manufacturing investments have seen a significant surge post-IRA, increasing to over $220 billion in March from the $80 billion level that was consistent from 2015 to 2021.
“There’s a lot of momentum and a lot of excitement behind the factories and the transformation of the grid that is going on all over the country,” Brainard reflected.
Despite Republican opposition to the IRA, many Republicans appreciate the economic boost from the investments it has spurred. Construction of a battery plant in Queen Creek, Arizona, incentivized by the IRA, was celebrated by Rep. Andy Biggs (R-Ariz.).
In another instance, Rep. Mark Green (R-Tenn.) praised the expansion of an electric vehicle battery plant in Cumberland City, Tennessee. This investment, also spurred by the IRA, is expected to create 83 new jobs in Tennessee’s 7th district.
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