Friday • November 21 2008
Economics & Finance
America needs a tax free energy bond
seahorse2
Raising capital is hard in this recession. America needs new ways of raising capital to finance a transition to other energy sources while at the same time creating jobs. So, I propose the Federal gov't authorize a new tax free "energy bond" that private companies can issue to raise capital for projects like nuclear plants, windmills, clean coal plants, railroads, hybrid and electric cars, solar manufactures, etc. The interest on these bonds would be exempt from Federal and State taxes.
Tanada
seahorse2 wrote:
Raising capital is hard in this recession. America needs new ways of raising capital to finance a transition to other energy sources while at the same time creating jobs. So, I propose the Federal gov't authorize a new tax free "energy bond" that private companies can issue to raise capital for projects like nuclear plants, windmills, clean coal plants, railroads, hybrid and electric cars, solar manufactures, etc. The interest on these bonds would be exempt from Federal and State taxes.
You get them started and I will put say 10% of my retirement savings into them. I think this would be a great idea.
seahorse
I would hope that a market for these could be created like the old WWII "War Bonds." Even better, with tax free energy bonds, individuals could buy a bond for their own favorite project, support it, instead of sending tax dollars to the black hole of the gov't coffers.
aahala2
seahorse2 wrote:
Raising capital is hard in this recession. America needs new ways of raising capital to finance a transition to other energy sources while at the same time creating jobs. So, I propose the Federal gov't authorize a new tax free "energy bond" that private companies can issue to raise capital for projects like nuclear plants, windmills, clean coal plants, railroads, hybrid and electric cars, solar manufactures, etc. The interest on these bonds would be exempt from Federal and State taxes.
There's "zillions" of fed energy related programs already, many
having to do with what you have suggested.
http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/subsidy08.pdf
Last edited by aahala2 on Fri Nov 21, 2008 3:50 pm; edited 1 time in total
jamest
Interesting idea.
My only concern is, who would decide what would be a qualified energy investment? If it's left in the hands of congress, they will use this as a mechanism for funneling money to their constituencies, regardless of the merits of the venture for energy development.
We all know what they did with biofuels, which turned almost immediately into the corn ethanol scam that has very little to do with energy production, but everything to do with political largesse.
My only concern is, who would decide what would be a qualified energy investment? If it's left in the hands of congress, they will use this as a mechanism for funneling money to their constituencies, regardless of the merits of the venture for energy development.
We all know what they did with biofuels, which turned almost immediately into the corn ethanol scam that has very little to do with energy production, but everything to do with political largesse.
seahorse2
aahala,
I haven't read the report you linked, at least not yet. But I did see the title is about Federal subsidies, which means the Federal gov't provides financing to a project. An "energy bond" would not require any gov't money, no gov't subsidy, other than exempting the payments on the bonds from state and federal taxes. It would be similar to a revenue bond, which is typically exempt from taxes and repaid from revenues generated from the project.
These "energy bonds" would hopefully catch the political momentum building up in society to "go green and fight global warming" to "get off fossil fuels" and support local projects or the project of their choice. I think that "energy bonds" would hopefully encourage individuals to contribute, or buy bonds, for their own favorite projects.
We could possibly make a "reverse bond" which is in reality a tax free contribution to a project. For example, a local utility needs capital to put up a windmill. It issues "energy bonds" to do so. The bonds pay no interest, but the principal paid for the bond is treated as any other deductible contribution.
I haven't read the report you linked, at least not yet. But I did see the title is about Federal subsidies, which means the Federal gov't provides financing to a project. An "energy bond" would not require any gov't money, no gov't subsidy, other than exempting the payments on the bonds from state and federal taxes. It would be similar to a revenue bond, which is typically exempt from taxes and repaid from revenues generated from the project.
These "energy bonds" would hopefully catch the political momentum building up in society to "go green and fight global warming" to "get off fossil fuels" and support local projects or the project of their choice. I think that "energy bonds" would hopefully encourage individuals to contribute, or buy bonds, for their own favorite projects.
We could possibly make a "reverse bond" which is in reality a tax free contribution to a project. For example, a local utility needs capital to put up a windmill. It issues "energy bonds" to do so. The bonds pay no interest, but the principal paid for the bond is treated as any other deductible contribution.
vtsnowedin
When your writing your legislation don't forget to make the principle a tax deduction from gross income. Also make the interest income exempt from the AMT. That should generate an adaquate pool of capital to build whatever is needed.