How Our Politicized Tax Code Rewards the Inefficient

Subject: txt engry CALI - Politicized
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For wind farms, the current code allows the write-offs over 3.5 years, a real boon for investors in wind mill projects. In fact, many such projects depend on this tax advantage to secure financing, especially since the right to take these deductions can be allocated with some freedom amongst the project's investors and the developers.

Alas, for nuclear power plants, the tax picture is not so rosy. They have to take their write-offs over 20.5 years, a significant disadvantage over a comparable investment in a wind project. Taking a hypothetical $5 billion in generation investment in each technology, here's a chart showing when those deductions could be taken and for how much:

From this chart, it is easy to see that the investors in a wind project get to write-off a LOT more money a LOT sooner than the investors in a nuclear plant. This is greatly to the advantage of the wind developers. At a 35% corporate tax rate, the difference in Year 2 alone is over $650 million in bottom line after-tax profits to the wind investors - that's cash money that can cut dividend checks.

Maybe now you can see why T. Boone Pickens is pushing wind farms.

Let's take the figures from Department of Energy's Energy Information Agency for capital costs and productive experience ("capacity factor") to see exactly what this means in terms of electrical production.

So that $5 billion will produce over TWICE the annual electrical output for American consumers if invested in nuclear power plants than if in wind farms.

One has to ask, do these provisions in the tax code really serve Americans' interests or are they written with someone else in mind?

So, in comparing the tax treatment of wind against that of nuclear power, one could get the idea that Congress is rewarding the inefficient while hobbling the productive.

I'd call that perversion and poor public policy.

[Only for us consumers - everyone else makes out like bandits. Again: nothing to do with the environment or energy 'independence'.

BTW:

The California legislature, to prove its green bona fides, recently passed a law to make California electric consumers buy 33% of their electricity from 'renewables'.

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image toon - cali grn engry = CA child instructer = hard left off of cliff re CAFE standards