Tax credits are special deductions that allow companies and individuals to lower their annual tax liabilities.
Such deductions are available to those who take a certain action or produce some particular product favored by Washington politicians or bureaucrats. Often, these credits give favored companies and industries unfair advantages over their competitors.
The Wind Production Tax Credit is a prime example. Created in 1992 to encourage investment in the wind energy sector, it costs over $2 billion every year. Not only does this increase our deficit, but it also discourages efficiency in the wind industry by rewarding energy production regardless of demand.
In many cases, companies simply build wind energy that is less efficient than other sources simply because of the tax write off. Some investors even point out that wind energy doesn’t make economic sense without credits.
Nor is this the only example. Tax credits for activities such as energy production—including oil and gas—funnel tax dollars into well-connected, successful businesses that don’t need to be subsidized by hard-working taxpayers.
If a product or service is truly valuable, it will be able to succeed without the taxpayers’ help.
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