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Texas Wind Industry Could Blow Away With Loss of Tax Credit

Sweetwater, Texas, lies directly west of Dallas-Fort Worth and east of Midland. It boasts slightly less than 12,000 souls and recently has seen a growth in the wind energy industry. Where only oil derricks may have broken the horizon a decade or so ago, now wind turbines turn in west Texas. The tax base has grown from $500 million in the county in 2000 to $3 billion today.

Part of the reason for this growth is a tax credit which may soon be gone with the wind. The tax credit began during the George H.W. Bush administration and wind power accelerated during the George W. Bush administration. Today, that tax law may change as soon as the end of this year unless Congress does something about it.

According to reliable sources, the tax credit is as much of a tossup as the presidential election polls. President Obama would continue the tax credit and candidate Romney would let it expire. However, whoever becomes the President would provide the signature but Congress must provide the bill and extend the tax credit.

Proponents of maintaining the energy tax credit maintain that one of the reasons for the growth of the industry was the help provided by the government as wind emerged as a viable energy source. Wind has grown from 2.7 percent of Texas energy in 2007 to 8.5 percent in 2011. The American Wind Energy Association estimates that if the tax credit expires, so will 37,000 jobs during the next two years.

Opponents of maintaining the energy tax credit maintain that one form of energy should not be given preference over another and that market forces should do their work. The tax credit isn't cheap either. Wind farmers are paid 2.2 cents for every kilowatt-hour of power they produce for 10 years. The subsidy is expected to cost the federal government $1.3 billion this year.

What the government gives, the government can also take away. So it is with federal tax credits. It is a wise idea to consult with a legal tax professional prior to making decisions related to anticipated tax credits or exemptions.

Source: News Observer, "Texas wind energy boom may go bust if tax subsidies disappear," Bill Hanna, Aug. 24, 2012

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