IRS data shows a huge disparity between rich and poor in a major Biden climate effort.
Upper-income homeowners are scooping up billions of dollars in tax credits for making their residences more energy efficient, while the poor are getting almost nothing under the same Biden administration effort.
That’s according to an analysis by POLITICO’s E&E News of a tax credit program that was expanded under President Joe Biden and is designed to spur homeowners to buy solar panels, insulation materials and other items that can reduce energy bills and home emissions.
The analysis found that the highest-earning 25 percent of households — those with taxable incomes of $100,000 or more — got 66 percent of the tax credits, worth a total of $5.5 billion. Meanwhile, the lowest-earning 25 percent, with taxable incomes below $25,000, received just $32 million.
The wealth disparity alarms some economists and advocates, raising concerns that the credits are giving taxpayer money to hundreds of thousands of people who don’t need financial help or incentives to buy equipment that saves them substantial money on energy bills.
“These tax credits don’t increase the affordability for families making over $500,000. They can already afford it. And they get lower energy prices,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association.
Tax credits reduce dollar for dollar the income tax that individuals and households owe the federal government. The residential energy credits in 2023 cut income taxes — and federal revenue — by a total of $8.4 billion.
The average credit was $2,340, but credits were much larger for people with higher income.
The wealth disparity also intensifies questions about the Biden administration’s unprecedented use of tax incentives as a cornerstone of his climate change policy.
Brookings Institution economist Sanjay Patnaik said the growing costs of the credits and of other federal spending on climate change could turn public opinion against programs that Biden and Congress created or enlarged.
“It’s a lot of money for relatively low emissions reductions,” Patnaik, director of Brookings’ Center on Regulation and Markets, said of the energy tax credits. “It runs the risk of making climate policy less accepted by the public because people will say, This is running up a big bill and is costing much more than expected.”
The Congressional Budget Office projected in 2022 that the energy tax credits would cost $2.4 billion in 2023.
It’s true. My military disability retirement isn’t big, but it isn’t taxable, so no tax credits, so no free solar for me.