Q: Where Can You Find a Firm Tax Credit? A: The Oklahoma Wind

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

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The 147-megawatt Weatherford Wind Energy Center.

The impetus for Oklahoma’s tax credit task force — and much of the current debate about the state’s tax incentives — is rooted in a 2010 opinion by then-Attorney General Drew Edmondson.

State Rep. David Dank (R-Oklahoma City), the task force’s co-chair, said the incentives discussed at Wednesday’s meeting were among those deemed “constitutionally infirm” by Edmondson.

“Infirm means sick,” Dank said in his opening remarks, adding that he hoped the task force could find a cure.

One healthy tax credit, if you read into Edmondson’s opinion, is the Tax Credit for Manufacturers of Small Wind Turbines, which serves as a good model by which to evaluate Oklahoma’s other tax incentives.

In his opinion, Edmondson outlines the criteria for a sound — and constitutional — economic incentive.

Tax credits must:
1. serve a public purpose,
2. be supported by adequate consideration, and
3. have adequate controls and safeguards.

Applying the three-part test to the wind turbine credit is easy, Edmondson wrote. The tax credit serves a public purpose, “because using renewable energy to conserve our natural resources benefits all Oklahomans.”

The tax credit meets the consideration requirement because “advanced small wind turbines” must actually be manufactured.

Adequate controls are in place because the company agrees to have their production and claims audited by the Oklahoma Tax Commission before claiming the credit, and because no credit is issued until the manufacturer has actually manufactured advanced small wind turbines.

In his letter to the attorney general’s office, Rep. Dank asked about the constitutionality of transferable tax credits, and whether transferring tax credits could be considered a “gift.”

One tax credit that meets the three-part test and appears to be transferable, according to Edmondson: the Tax Credit for Manufacturers of Small Wind Turbines.