Question: What is the fiscal cliff?
Answer: Yet another misguided and senseless decision by the federal government.
Despite its complete failure to address the $16 trillion national debt, there are a few perks to Congress’ decision to avoid the fiscal cliff. By renewing the “American Taxpayer Relief Act,” as it’s actually called, Congress prevented wide-spread spending cuts to key organizations such as the EPA and the National Park Service while also renewing a seriese of clean energy tax credits. Here’s a list of them, provided by Mother Nature Network:
One of the bill’s highest-profile environmental perks is a one-year extension of a tax credit for wind-energy production. The U.S. wind industry has been urging Congress to renew the tax credit for years, arguing that its expiration would eliminate some 37,000 American jobs. Worth 2.2 cents per kilowatt-hour of wind-generated electricity, the credit’s looming expiration has already been blamed for some layoffs in recent months, but even its belated renewal pleased many industry advocates. In addition to preserving the production tax credit, or PTC, the fiscal cliff bill extends an investment tax credit for projects under construction, a measure the industry says is crucial to accelerating the country’s development of renewable power. Both credits will apply to projects that begin construction before Jan. 1, 2014.
While the wind industry’s tax credits may have a broader impact, Congress also extended several financial incentives for U.S. biofuel producers. These include a cellulosic biofuel producer credit, a biodiesel and renewable diesel credit, and a special allowance for cellulosic biofuel plant property. Along with renewing tax credits, the bill also specifies that algae is a qualified feedstock for biofuel production.
Power producers aren’t the only energy-related beneficiaries of the fiscal cliff deal. The Senate and House extended a slate of tax credits that encourage more sustainable energy consumption, too, including tax credits for new and existing energy-efficient homes and another that softens the expense of energy-efficient appliances.
The fiscal cliff deal also contains some late Christmas gifts for drivers of electric cars and other eco-friendly vehicles. It extends a tax credit for two- or three-wheeled plug-in electric vehicles, for example, which could mean up to $2,500 for anyone who buys a qualified electric motorcycle or trike. And it stretches out a credit for alternative-fueled-vehicle refueling property through Dec. 31, 2013.
Along with the fiscal cliff, Congress helped the country avoid the so-called “dairy cliff,” a potential spike in milk prices caused by the expiration of the 2008 farm bill. The deal extends a “dairy price support” subsidy through Dec. 31, 2013, avoiding a scenario in which U.S. Agriculture Secretary Tom Vilsack warned a gallon of milk could cost $7. The milk subsidy was one of several portions of the farm bill extended Tuesday, at least nominally. The deal reauthorizes the USDA’s Conservation Reserve Program, Organic Agriculture Research and Extension Initiative, Specialty Crop Research Initiative, and Biobased Markets Program, among others, yet many key provisions remain unfunded.
Research and innovation
Another tax credit sustained by the fiscal cliff deal is the research tax credit, which has already been extended 13 times since it was first introduced in 1981. Meant to spur job growth by encouraging businesses to invest in research and development, the credit has historically enjoyed bipartisan support, with proponents arguing its cost is offset by an increase in innovations, patents, business activity and thus federal revenue.