Tax Breaks Will Spur Job Creation, Investment in Renewable Energy
By U.S. Rep. Stephanie Herseth Sandlin
May 29, 2008

I’m pleased to report that the U.S. House of Representatives recently passed the Renewable Energy and Job Creation Act – a bill I proudly supported because of the real world tax relief it will provide to South Dakota families, as well as the incentives it will offer to businesses and entrepreneurs to create jobs and invest in renewable energy.

The Renewable Energy and Job Creation Act extends a number of vitally important tax incentives, but perhaps none is as critical as the one-year extension of the production tax credit for wind energy. Unfortunately, this critical provision has been allowed to expire repeatedly in recent years. And although I’m disappointed that this extension is shorter than the House originally passed in its version of the legislation in February, a one-year extension still gives investors and entrepreneurs an important measure of the certainty they need to move forward. I’m hopeful we can revisit the issue next year, and hopefully provide for a longer-term extension of the wind energy production tax credit.

According to the American Wind Energy Association, South Dakota ranks fourth in the nation in wind energy potential, but we can’t capitalize on this enormous potential if investors and entrepreneurs don’t have the piece of mind they need. In doing so, we can develop South Dakota’s rural economy by building on our state’s established leadership when it comes to clean, homegrown, renewable energy. Also, the bill recognizes the important role biofuels play in the overall diversification of our nation’s energy portfolio. Among other provisions that serve to encourage enhanced biofuel and biodiesel production, the bill establishes a new tax credit of $1.01 per gallon for cellulosic biofuel production from now through 2015.

In addition to investing in renewable energy, the bill provides vital tax relief to hard-working families through a number of additional tax break extensions. Importantly, the bill includes an extension of the state sales tax deduction, which allows individual filers in states – like South Dakota – that don’t have an income tax the ability to deduct state and local sales tax. The extension is for one year, and is estimated to allow at least 58,868 middle class families in South Dakota to deduct a total of $79 million dollars.

Additionally, the bill increases eligibility for the refundable child tax credit in 2008. Currently, the child tax credit is available to those making $12,050. The bill would reduce this floor to $8,500 for 2008, making it far more accessible to families who need it. By making this change, 31,374 children in South Dakota will qualify for the refundable tax credit allowing more parents to put more of their hard-earned dollars toward making ends meet.

In addition to recognizing the struggles that middle-class families have in supporting their children as they grow up, this bill also helps parents finance the cost of college by extending the deduction for tuition and related expenses. This important deduction allows qualified filers to deduct as much as $4,000 for the cost of higher education, putting college within reach for more South Dakota families.

Finally, this bill makes important investments in our businesses to spur American innovation and investment by extending the Research and Development tax credit. This critical credit will help ensure the continued competitiveness of American businesses. And particularly important to businesses in South Dakota, the bill extends for one year the business tax credit for employers that work and live on or near an Indian reservation. The credit is for wages and health insurance costs paid to qualified employees in the current year.

It is also worth noting that this bill provides relief to tax-payers while not adding to the national debt. The incentives and relief are fully offset by closing a tax loophole that will ensure hedge fund managers and certain corporate executives play by the rules and aren’t allowed to hide profits through offshore corporations. Additionally, it also delays the implementation of a pending tax benefit for multinational companies that have shipped jobs overseas, instead focusing our tax policy on creating jobs and encouraging business investment here at home.

The tax relief provided in this bill is common sense and invests in clean renewable sources of energy while allowing families and business to keep more of what they earn. I’m hopeful that the House and the Senate can act quickly to get the president a bill he can sign so this relief can be passed on to hard-working Americans as soon as possible.

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