GOP tax bill will devastate renewable industry while incentivizing automation

Joe Romm Think Progress

Polluting robots of the world, unite! The GOP tax bill is for you.

The rest of us, however, have a lot to lose from GOP tax changes that favor investments in dirty energy over clean — and robots over human workers.

As one MIT economist told Newsweek, “We are creating huge subsidies in our tax code for capital and encouraging employers to use machines instead of labor.” And unless significant changes are made in the GOP plan, those machines will be running on dirty energy.

Last month, I discussed how the House tax bill targets key solar and wind energy tax credits that have helped make clean energy a crucial high-wage job-creating sector in the United States.

The good news is that the Senate tax bill doesn’t roll back those renewable energy tax credits. The bad news is that it contains language that could seriously undermine the investment in renewables by imposing “a new 100 percent tax” on those credits, as Gregory Wetstone, head of the American Council on Renewable Energy, explained in a statement.

“If this bill passes as drafted, major financial institutions would no longer participate in tax equity financing, which is the principal mechanism for monetizing credits,” Wetstone pointed out. “Almost overnight, you would see a devastating reduction in wind and solar energy investment and development.” Meanwhile, tax subsidies for fossil fuels, many of which are decades old, would continue unchanged–and the Senate bill opens up the Arctic National Wildlife Refuge to drilling.

This type of clean energy financing will reach $12 billion this year, according to Bloomberg New Energy Finance, which examined the impact of this change in detail.

This investment, much of it by multinational finance companies, has helped leveraged some $50 billion a year in U.S. wind and solar projects, creating hundreds of thousands of jobs.

Ironically — or, rather, tragically — harming renewables mostly harms red states. As “The American Prospect” noted, “The states that voted for Trump produce nearly 70 percent of wind energy, while 85 percent of existing wind projects are in GOP-held congressional districts.”

As for longer-term impacts, the GOP plan would cut billions of dollars in incentives for  the biggest new source of sustainable high-wage employment in the world — clean energy — just as China and the rest of the world are making massive investments.

What’s unknown at this point is how these and other changes to these tax credits will be dealt with in the final bill, after the House and Senate work out their differences. While the House plan to gut the credits was intentional, it’s not clear that Senators intended to undermine them, so the problem is fixable.

One thing that was very intentional was the “full and immediate expensing of equipment purchases” provision. This would let companies deduct from their taxes the full cost of some types of investments, such as new industrial equipment, that are currently only allowed a 50 percent deduction.

This change would occur just when companies are beginning to automate their factories using robots and advanced computing technology, as corporate tax attorney Robert Kovacev, explained to Huffington Post: “It’s going to accelerate spending, basically, on robots that could displace workers.”

PricewaterhouseCoopers had already projected that over the next 15 years over a third of U.S. jobs could be lost to automation.

The GOP plan naturally has no tax incentives to encourage businesses to hire more actual workers or to retrain those who lose their job due to automation

Indeed, the Senate bill is so bad that Bloomberg’s editors wrote a piece explaining “Republicans have managed to make a terrible plan worse.” As one example the equipment-expensing provision would take effect immediately, but the Senate only lowers the corporate tax rate to 20 percent (from 35) in 2019.

“This will allow businesses to take deductions on investments while rates are high, then pay a lower rate on the resulting income, creating a perverse incentive to pursue otherwise unprofitable projects,” explains Bloomberg. So the Senate bill actually encourages companies to replace workers even with unprofitable robots.

Unprofitable polluting robots — quite a legacy for the disastrous GOP tax plan.

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Reposted from Think Progress

Posted In: Allied Approaches

Union Matters

Freight can’t wait

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities.

A freight train hauling lumber and nylon manufacturing chemicals derailed, caught fire and caused a 108-year-old bridge to collapse in Tempe, Ariz., this week, in the second accident on the same bridge within a month.

The bridge was damaged after the first incident, according to Union Pacific railroad that owns the rail bridge, and re-opened two days later. 

The official cause of the derailments is still under investigation, but it remains clear that the failure to modernize and maintain America’s railroad infrastructure is dangerous. 

In 2019, 499 trains that derailed were found to have defective or broken track, roadbed or structures, according to the Federal Railroad Administration’s database of safety analysis.

While railroad workers’ unions have called for increased safety improvements, rail companies have also used technology and automation as an excuse to downsize their work forces.

For example, rail companies have implemented a cost-saving measure known as Precision Scheduled Railroading (PSR), which has resulted in mass layoffs and shoddy safety protocols. 

Though privately-owned railroads have spent significantly to upgrade large, Class I trains, regional Class II trains and local, short-line Class III trains that carry important goods for farmers and businesses still rely on state and local funds for improvements. 

But cash-strapped states struggle to adequately inspect new technologies and fund safety improvements, and repairing or replacing the aging track and rail bridges will require significant public investment.

A true infrastructure commitment will not only strengthen the country’s railroad networks and increase U.S. global economic competitiveness. It will also create millions of family-sustaining jobs needed to inspect, repair and manufacture new parts for mass transit systems, all while helping to prevent future disasters.

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There is Dignity in All Work

There is Dignity in All Work