Lawmakers Question Transferable Tax Credit For Energy-Efficient Homes
Oklahoma’s tax credit for energy-efficient homes is in the crosshairs of a legislative task force looking for tax breaks to eliminate.
The incentive was enacted in 2005 and provides up to $4,000 to home builders who meet certain efficiency standards when constructing new homes that are 2,000 square feet or less. The homes must be 20 percent more efficient than the standards set by the International Energy Conservation Code of 2003.
According to nonprofit journalism outfit Oklahoma Watch, which filed a report published in Tuesday’s Tulsa World and Wednesday’s edition of The Oklahoman, the tax credit reduced state revenue collections by $3.8 million last year. The tax credit was suspended in 2010 to help balance the state’s budget and will return to effect on July 1, 2012.
In Oklahoma Watch’s story, Sen. Mike Mazzei (R-Tulsa) — co-chairman of the task force and chairman of the Senate Finance Committee — criticized the tax credit, saying taxpayers were funding a subsidy that didn’t expand the state’s tax base.
“Small subsidies that are frittered around to lots of different interest groups that have marginal, short-term consequences, in my opinion, are not items that are doing that,” Mazzei told Oklahoma Watch’s Carol Cole-Frowe.
The U.S. Department of Energy and large-scale home builders like Ideal Homes, Home Creations and Simmons Homes, of course, disagree.
At the core of the discussion is the tax credit itself, which unlike most such incentives is transferable to other taxpayers. Oklahoma Watch reports that the credits usually trade for 80 cents on the dollar.
Home builders can sell surplus credits to others — individuals and corporations — who can use the credits to reduce the amount they pay in state taxes. Some builders accrue more energy-efficiency tax credits than what they owe in state taxes.