Tax Reform Proposal Threatening Geothermal Heat Pump Tax Credits is “Dead on Arrival”
The headlines—and the geothermal heat pump industry—have been buzzing about tax reform since the House Ways and Means Committee released a proposal by Chairman Dave Camp (R-MI) on Feb. 26. To balance substantial tax cuts, the draft bill eliminates or shortens scores of tax breaks, including those currently in place for geothermal heat pumps.
“The Camp proposal would end the 25D federal tax credit of 30% for residential installations by Dec. 31, 2014,” explains Geothermal Exchange Organization (GEO) President Doug Dougherty. “That is two years earlier than their planned termination at the end of 2016.” The 48(a) tax credit of 10% for commercial installations would stay in place through 2016.
The threat passed quickly. “I am happy to report that the Camp tax reform proposal is ‘Dead on Arrival’ in the halls of Congress,” says Dougherty, “and that the industry’s tax credits are safe for the time being.”
Besides drawing the ire of GEO and scores of other industries, provisions in the draft bill that would cut the top individual income tax rate by taking away tax breaks has infuriated Wall Street. With that, scores of prominent Republican leaders are distancing themselves from the Camp draft, saying it does not represent the majority view of the party and that is just a straw man for ideas and not final draft legislation.
House Majority Leader John Boehner (R-OH) called the Camp document a “discussion draft,” and laughed at the prospect of its coming to a vote in 2014. Senate Minority Leader Mitch McConnell (R-KY) dismissed the Camp proposal as having no chance of passage during an election year.
“The conclusion of politicians and pundits alike is that the Camp proposal will not gain any traction and won’t even come to a vote in the House,” says Dougherty. “And that bodes well for concerns already voiced by GEO for the geothermal heat pump industry.”
Citing the benefits of consumer cost savings, good jobs, more efficient energy use, enhanced electric utility operations, improved air quality, GEO has filed formal comments with the House and the Senate on the industry’s tax credits for residential and commercial geothermal heat pump installations.
GEO seeks an extension of those credits through 2020. “We will continue working toward that goal with our Washington DC team as Congress wrestles with tax reform,” says Dougherty. As the debate ensues, he said, “GEO will maintain its deep Washington presence to head off any attempts to cut short our current tax rebates as we seek an extension to 2020 and beyond for credits offered from the federal level for geothermal heat pump installations.”