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

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work