You thought Solyndra was bad, watch out for the *NAT GAS Act*


By now almost everyone knows the scandal Solyndra has become. The Institute for Energy Research put together this 2 minute video as a summary:

But how many of you are aware about a hearing on the NAT GAS Act? Or New Alternative Transportation to Give Americans Solutions Act? Probably not many. Yesterday the House Ways and Means Committee held a hearing on this proposed act. H.R. 1380 was introduced by Rep. John Sullivan (R-OK). It has 183 co-sponsors, a mixture of Republicans and Democrats. Below is the summary:

New Alternative Transportation to Give Americans Solutions Act of 2011 – Amends the Internal Revenue Code to: (1) allow an excise tax credit through 2016 for alternative fuels and fuel mixtures involving compressed or liquefied natural gas; (2) allow an income tax credit through 2016 for alternative fuel motor vehicles powered by compressed or liquefied natural gas and make Indian tribal governments eligible for such credit; (3) modify the tax credit percentage for alternative fuel vehicles fueled by natural gas or liquefied natural gas; (4) allow a new tax credit for the production of vehicles fueled by natural gas or liquefied natural gas; and (5) extend through 2016 the tax credit for alternative fuel vehicle refueling property expenditures for refueling property relating to compressed or liquefied natural gas and allow an increased credit for such property.

Requires the Secretary of Energy to provide funding to improve the performance, efficiency, and integration of natural gas powered motor vehicles and heavy-duty on-road vehicles. Authorizes the Secretary to make grants to manufacturers of light and heavy duty natural gas vehicles for the development of engines that reduce emissions, improve performance and efficiency, and lower cost.

Expresses the sense of Congress that the Environmental Protection Agency (EPA) should streamline the process for certification of natural gas vehicle retrofit kits to promote energy security and provide incentives to encourage and reward manufacturers who produce natural gas powered vehicles.

Amends the Energy Policy Act of 1992 to allocate funds for vehicles that are repowered or converted to operate on an alternative fuel.

The hearings were mostly IRS officials testifying about their *performance* in running the tax code, and it wasn’t pretty. J. Russell George, Treasury Inspector General for Tax Administration had this to say on page 4:

Our reviews of the effectiveness of IRS processes to identify and prevent erroneous claims for these energy-related credits and deductions . These erroneous claims could have been minimized if the IRS had taken the following actions which would also help minimize erroneous claims for other credits as well: [emphasis mine]

  • Establish effective processes to verify eligibility for these credits up front at the time tax returns are processed.
  • Design the tax forms used to claim the credits and deductions to request key information that can be used to verify eligibility.
  • Use the data the IRS already has to identify non-qualifying claims

To the IRS: if you can’t manage the tax deductions already in place for present vehicles eligible, how do you intend to manage the tax credits for this new *act* if it goes into force?

IER had this to say about the issue:

The Solyndra loan program and the NAT GAS Act are both based on the idea that private investors are not making good enough decisions, and therefore the federal government needs to speed things up—either through direct subsidies or through tax subsidies. The proponents of these programs argue that subsidizing solar panels or natural gas truck, bus, and car conversions will stimulate the economy and create jobs. Sadly, the NAT GAS Act will create the same incentives that gave us Solyndra’s demise.

David W. Kreutzer, Ph.D.,Research Fellow in Energy Economics and Climate Change at The Heritage Foundation testified before Congress on August 3 of this year. Here is a salient remark from that testimony, bottom of page 2:

Just this past week the Oversight Subcommittee of the House Ways and Means Committee held hearings regarding paid tax preparers. In opening statements it was noted that a Government Accountability Office study found nearly all returns completed by paid preparers contained errors. The errors in one category were estimated to cost the federal government over $100 billion [emphasis mine.] This finding is an indictment of the complexity of the tax code as much as it is an indictment of paid preparers.

In any event, the NAT GAS Act adds to the complexity with amendments to the current (already too complex) tax code. The amendments this act superimposes on the existing tax code will only make the job of those paid tax preparers even more difficult and prone to error.

Again, the purpose of the complexity is to narrowly tailor benefits to select recipients. This is the hallmark of a subsidy.

While some would argue subsidizing natural gas vehicles would create greater national security and make us less dependent on “countries who don’t like us very much” Kreutzer on page 6 says it’s “a poor anti-terror plan.” His conclusion:

With narrowly targeted amendments to the tax code, the NAT GAS Act creates subsidies for selected technologies. These subsidies promise preferential benefits for special interests, greater burdens on the federal budget, and less economic output. The NAT GAS Act would not significantly cut funding for hostile foreign regimes.

The major surprise to this writer is that so many Republicans are on board as sponsors of this act.

We can’t let *history repeat itself* and have another Solyndragate, especially one perpetrated by our Congressional representatives. Call your Congress Critter and tell them to vote “NO!”

Crossposted at Conservative Outlooks

Good vigilance, LIO. (Lady P. Ed.)

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Deplorable Reagan Conservative. Pro-life, pro 2A. Waiting for Obama's "legacy" to be undone.

Twitter: @LadyImpactOhio

"We the People tell government what to do. It does not tell us."__Ronald Reagan in his farewell speech.

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September 23, 2011 6:43 pm

I’d say the free market has already voted on natural gas as an auto fuel; an uncle of mine had his family station wagon converted in 1958, so we know how, but nobody seems to want it.
Another ‘product’ without any demand, yeah, that’ll fix everything.

September 23, 2011 7:05 pm

Couldn’t help but notice that Huntsman touted Natural Gas twice during the debate.