The legislative panel is investigating the utility of tax breaks
granted by the state, with an eye towards eliminating those that do not
sufficiently bring benefits to the state. One of the most egregious offenders
in that regard is the absurdly generous credit given to solar panels that
enriches few at the expense of the people.
On top of a generous federal tax credit of 20 percent, the state in the
waning days of the Gov. Kathleen
Blanco Administration passed a law that lards on another
50 percent for solar or wind construction for the first $25,000 in expenses
(most installation costs will go above this level, many way above it). The most
recent figures indicate that costs $13 million a year, and the generosity is
such that the forgone dollars are expanding rapidly.
And the only reason significant growth has occurred in this area has
been because of large scale state government redistribution of resources to a
small segment of homeowners and the solar energy industry. With among the
lowest energy costs in the country with an average cost of 7.8 cents per kWh, the average
savings for a Louisiana residence using solar is only $230
a year. Being that a system may cost 200 times that (and does not include
the occasional maintenance costs such as panel failure, breakage, removal and
reinstallation for roof repair, etc.), except for palatial residences it would
make no sense whatsoever on a cost recovery basis (discounting any feel-good
ideological benefits an homeowner might enjoy) to go solar without these
credits.
Also worth noting, this tax credit accrues only to wealthier households.
Savings and costs as they are, there’s little incentive for lower energy users
to employ this strategy even with tax credits, who in any case don’t even have
the income to use all of the credits
immediately and would have to spread them out over years. Even with the credits
used by higher-income, higher asset households, 20 years is a typical payback
period.
Yet some act as if it’s their divine right to have taxpayers subsidize
their chosen lifestyle. Particularly loathsome was the attitude expressed in
front of the committee by Tucker Crawford of the Gulf States Renewable Energy
Industries Association, a trade group and solar installation being his trade, who, in
response to the suggestion by Public Service Commissioner Clyde Holloway that these credits
be scaled back, whined that this would cost “hundred, even thousands” of
indirect and direct jobs.
But why should government pick the solar industry as a winner and
transfer taxpayer wealth to it when it brings so few demonstrable benefits to
taxpayers compared to the wealth absconded from them? To use a previous
example, the state could do the same for propagators of the McKayla Is Not
Impressed meme, creating all sorts of jobs but with economic costs far
exceeding the benefits. A much wiser use of resources would be, rather than
creating incentives to have people engage in a very inefficient economic
activity, not to distort the market and to allow people to follow market
signals to spend and invest that money in activities that promise much more
favorable benefit/cost ratios, which in the end will create more economic
activity, jobs, and wealth than the current approach.
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