By Debra DeHaney-Howard
May 24, 2004

With an overwhelming 92-5 vote, the U. S. Senate passed May 11 the corporate tax bill (S. 1637), which includes tax breaks and financial incentives from scaled back energy legislation (S. 2095). This legislation was introduced last February by Senator Pete Domenici (NM), Chair of the Senate Energy and Natural Resources Committee and is stalled in the Senate.

In an effort to move a portion of this energy bill, Senator Charles E. Grassley (IA), Chairman of the Senate Finance Committee, last month attached the tax title from the energy bill to S. 1637.

Objecting to attaching the energy tax title to S. 1637 on the grounds that it was unrelated, Senator John McCain (AZ) offered an amendment to remove the entire energy tax title from the corporate tax bill. McCain's amendment was defeated by a vote of 85-13.

The ten-year $18 billion energy tax measure, which was originally estimated at $14 billion, includes tax incentives for energy efficiency and conservation programs, and for upgrades to existing homes, equipment, appliances, and commercial buildings.

It calls for allowing tradable tax credits for tax-exempt entities such as municipal owned utilities, rural cooperatives, state agencies, Indian Tribal governments, and the Tennessee Valley Authority. During its 2002 Annual Meeting in Madison (WI), the United States Conference of Mayors adopted policy supporting tradable tax credits for municipalities who make investments in clean and renewable technologies for generation of energy.

The corporate tax bill also contains language that provides energy production tax credits to companies that produce electricity from renewable energy sources. These include wind, solar, and geothermal. In addition, there are tax incentives for hybrid and fuel cell vehicles, and oil and gas production credits.

Final action still requires the House of Representatives to pass a similar corporate tax bill, which is currently working its way through the House. A House'senate conference committee must then reconcile the differences between the House and Senate version of the bill.