OPINION:
Politicians, especially Republicans, often talk a big game about the importance of small businesses to America’s economy, but, with respect to supporting job creators on Main Street with good tax policy, the Senate version of President Trump’s one big bill has plenty of room for beautification.
Instead of expanding the deduction for qualified business income to allow small businesses to keep more of the money they earn and invest in their communities, the Senate appears to be ready to preserve much of President Biden’s so-called Inflation Reduction Act by showering unreliable energy sources such as wind, solar and battery storage with hundreds of billions of taxpayer dollars.
The worst part about the wind, solar and battery subsidies is that the benefits overwhelmingly flow to big corporations on Wall Street and foreign countries such as China. Mr. Trump ran for office on the promise of fighting for the American worker, not enriching big business and communist China. According to the E+E Leader, China controls more than 80% of the global solar panel supply chain. An intricate web of government subsidies, low-cost coal energy and the use of slavery allows China to produce solar panels at prices far lower than its U.S. competitors.
The regime in Beijing is exploiting the federal subsidies offered through the IRA to establish enough solar manufacturing capacity on U.S. soil to serve nearly half the domestic market.
In other words, American families and businesses are paying higher taxes to subsidize Chinese firms that make expensive and unreliable forms of energy that raise electricity prices and make the grid more vulnerable to rolling blackouts.
Other than Chinese companies, the big winners in the Senate version of the bill are Wall Street banks and hedge funds that buy and sell the tax credits, thanks to a provision allowing unreliable energy developers to sell their tax subsidies to others. The House version wisely restricted this ability to stop the wealth transfer from Main Street to Wall Street.
Making matters worse, the Senate version of the bill is attempting to relax some of the House’s restrictions on allowing hostile countries such as China, known in the bill as Foreign Entities of Concern, to continue to benefit from American tax payments.
Instead of arguing which unreliable energy sources or hostile foreign countries should be getting taxpayers’ cash, why doesn’t Congress invest in American companies on Main Street by allowing them to keep more of their hard-earned money through an expanded deduction for qualified business income?
The Small Business Administration reports that 34.8 million small businesses operate in the United States and support 59 million jobs, accounting for 45.9% of the private-sector workforce. The solar industry accounts for just 0.28% of the country’s total jobs; many are low-paying and temporary. Nevertheless, the solar industry is set to receive tens of billions of dollars in subsidies.
When it comes to tax policy, Congress should focus on maximizing its return on investment. Empowering small businesses and expanding the qualified business income deduction is a far better means of creating strong local communities than expanding subsidies for unreliable energy sources that increase consumer costs, undermine grid reliability and are largely made in China.
• Isaac Orr is the vice president of research at Always On Energy Research.
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