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A bevy of conservative, Republican-oriented groups have sent the White House a letter objecting to the Bush administration s plan for transferable credits for companies that reduce greenhouse gas emissions. The letter, spearheaded by the Competitive Enterprise Institute, echoes an earlier, October 2002, letter warning against regulatory offsets for carbon reductions.
Since then, notes the letter, Sens. John McCain(R-Ariz.) and Joe Lieberman(D-Conn.) have introduced their cap-and-trade greenhouse legislation, and the president has introduced his latest tax proposal, which includes increases in tax expensing of capital investments. The McCain-Lieberman legislation, says the letter, would have the same effect as an energy tax, with the greatest impacts on the poor and seniors. The letter warns that "early reductions" in the White House plan would have full value only if emissions are capped. Thus, companies that are interested in earning credits for early reductions "will gain incentives to lobby for the bill."
On the other hand, the administration s approach to expensing "is a better way to speed up carbon intensity decline." The letter observes, "Your growth and jobs plan calls for increasing the small business expensing option from $25,000 to $75,000. This is a good first step, but we think the limits on expensing should be expanded even further, and extended to all capital investment."
Expensing all capital investment, says the letter, would remove "the tax penalty on capital investment" and "would encourage more rapid turnover of plant and equipment. In general, state-of-the-art facilities are more productive than older units, delivering more output per unit of input, including energy inputs. Expensing would thus accelerate carbon intensity decline yet without building political support for energy rationing."
Groups joining CEI in the letter were Citizens for a Sound Economy, National Taxpayers Union, American Association of Small Property Owners, American Conservative Union, Small Business Survival Committee, 60 Plus Association, Americans for Tax Reform, American Legislative Exchange Council, The Seniors Coalition, African American Republican Leadership Council, Citizens Against Government Waste, Consumer Alert, and Strategic Issues Research Institute.