Why Green Energy Tax Cuts?

Of course, when asked by a progressive, it means: why tax cuts instead of direct subsidies, mandates, carbon taxes, etc.? When asked by a conservative or libertarian, it means why incentivize alternative energy at all?

There are several good reasons to support supply side tax cuts for clean, renewable energy… and different reasons depending on your political orientation, I might add.

For instance, Milton Friedman once said “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” So for true Friedman fans, forget global warming, forget foreign oil dependency, this argument is the clincher: it is a TAX CUT. As such, the net benefit to the economy from cutting taxes will be positive. If, as many free market scholars argue, cutting taxes is the best thing to do right now for the economy, then cutting some taxes is the next best thing. You do what you can.

However, if you are asking “why promote alternative energy at all?” then I defer to the folks, left and right, talking about the negative externalities of fossil fuels: global warming, economic and strategic vulnerability (and hard costs) arising from oil dependency, national security considerations, many sorts of pollution, depletion of finite resources, etc. I am not trying to judge, promote or add to those arguments, other than to say that they are serious, and the consequences of dismissing these concerns, if wrong, could be bad. Prudence dictates that if something can be done to promote alternative energy and lessen the social costs and risks of fossil fuels, if it would do more good than harm, then it would be better to do it.

If you are asking “why specifically supply side tax cuts for green energy? Why not direct subsidies, mandates, carbon taxes, etc.?” the answer is that, if it seems something must be done, supply side tax cuts are the least harmful, most beneficial of all possible incentives for green energy. Tax cuts are usually a net positive for the economy as a whole, while direct subsidies, increased regulation and taxes on carbon (or anything) are all economic depressants.

Therefore, if the political majority of the US has decided to promote alternative energy for whatever reason (as seems to be the case) supply side tax cuts is the best way to do so. For those who wish to promote alternative energy, it is the only way to promote success, not failure. But even for those who do NOT wish to promote alternative energy, it is still the best middle ground compromise that is (a) cheaper and better for the economy that any of the alternatives (carbon taxes, direct subsidies, increased regulation and mandates), and (b) sure to not waste money on failures, sure to only benefit the most successful, profitable alternative energy business models. Further, it is the only kind of incentive whose disappearance will not spell disaster, that will not create unsustainable, dependent corporate subsidy addicts.

But there is another, even more important reason to support green energy tax cuts: They can help heal the left/right schism in America. This is a win-win solution that both lowers taxes and helps the environment, that replaces costly subsidies, taxes and regulations, that combines both environmental and libertarian concerns. That sets the stage for more to come.

For America, the ultimate big win of adopting solutions like this would be the restoration of something similar to the 18th-19th C. Liberal consensus, that combined a passion for freedom and free markets, with a powerful appeal to justice, rights, equality and humanity. That 19th C. consensus has largely fractured into two sets of concerns, claimed respectively by the the right and left of today. Restoring that consensus would mean smaller government, lower taxes, cheaper, more efficient environmental and humanitarian policies, greater prosperity.

Supply side tax cuts for green energy can lead to: (a) competitive alternative energy companies that can stand alone, with zero taxpayer dollars wasted on incentives for failures; (b) a revitalized auto-industry; (c) a right/left thaw, a new liberty-with-humanity consensus leading to more efficient, cheaper, sustainable incentive-based social policies; (d) broad supply side tax cuts for the whole economy; (e) smaller deficits and ever more balanced budgets. I expect, as profitable alternative energy companies emerge, tax preferences will be reduced.

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R. Randolph Richardson is the founder of Middle Way Mediation, and the publisher of Green Energy Tax Cuts whose goal is to create policy proposals that can bridge the gap between right and left and promote clean energy in a rapidly adoptable fashion by focusing on a supply side solution to global warming and oil dependence in the United States.

Click here to learn more about R. Randolph Richardson.

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Why Green Energy Tax Cuts?

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