Comparing the Cost of IRA Energy Tax Credits to Expensing

Adam N. MichelThe House Republican debt ceiling package repeals many of theInflation Reduction Act (IRA)energy tax credits.Revised estimates of the tax credits confirm that their costs will be at least two times higher than originally thought.Putting aside the countless problems with each of the specific tax credits, it ’s worth comparing the size of the special interest IRA tax subsidies to other more beneficial tax changes Congress could have made. For example, the energy credits could end up costing almost twice as much as making full expensing permanent, the most pro‐​growth investment incentive in the 20 17Tax Cuts and Jobs Act.Costs Revised UpWhen passed in August 2022,congressional scorekeepers estimated that the energy tax credits in the IRA would cost $271 billion dollars over ten years. Since then,Goldman Sachs,Credit Suisse, TheBrookings Institution, andThe MercatusCenter have all published estimates showing that the cost of the IRA tax credits could be two to three times larger than initially projected. Goldman and Brookings put the estimated ten ‐​year cost at over $1 trillion.In an updated preliminary score to repeal most of the IRA tax provisions, theJCT now estimates that repealing the tax credits would raise $570 billion, doubling their original estimate. Notably, thescore does not include the cost of some of the subsidies for electric vehicles. Goldman estimates the total for all EV credits could cost as much as $390 billion over the decade, which ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs